White House Stands Behind New RESPA Rule

The Obama administration is still standing behind a Real Estate Settlement Procedures Act rule and urged a U.S. district court to dismiss a legal challenge to the rule with "prejudice." Department of Justice attorneys did not present a defense or any praise of the RESPA rule, which the National Association of Mortgage Brokers claims in a lawsuit would place brokers at a "permanent disadvantage in the marketplace." Opponents of the RESPA rule noted that the DOJ response was expected and the new administration still has time to reconsider its position, since the main provisions of the final rule do not go into effect until January 10, 2010. "We hope the new administration will pull back the RESPA rule as they are doing with other regulations that were put into effect by the Bush administration after the election," said Matt Dolan, a NAMB consultant with the Federal Policy Group. The Department of Housing and Urban Development issued the RESPA rule in November. It requires lenders to provide a standardized and expanded good faith estimate disclosure to borrowers shortly after they file a mortgage action. The GFE includes a disclosure of the mortgage broker's compensation, which NAMB claims is unfair - since other originators don't have to disclose their compensation.