August 25, 2008

The Honorable Steven Preston
Secretary
Department of Housing and Urban Development
451 Seventh Street, SW
Washington DC, 20410

Dear Secretary Preston:

On behalf of the nation’s 70 million+ homeowners we thank the Department of Housing and Urban Development for standing by its decision to go forward with proposed changes to the Real Estate Settlement Procedures Act (RESPA). These proposed changes to RESPA will save consumers $8.35 billion a year by helping them shop for the best mortgage loans, title insurance and other settlement services, protect consumers from overcharges, and promote competition between mortgage lenders and settlement services providers.

The proposal has been developed over many years with input from all stakeholders. The rule language has been consumer tested, and consumer organizations overwhelmingly support the changes. So do many responsible professionals in the mortgage lending and other real estate services sectors, as evidenced by their many supportive postings on industry blogs.

As we pointed out in our June 12 comments on the proposed RESPA regulation, the fact that between five and six million American homeowners are currently at risk of foreclosure makes it clear that a large share of homeowners lacked full awareness of the types of risks of certain types of mortgages before agreeing to their terms. The heartbreaking stories that we have heard from many of our members revealed that many of them didn’t fully understand the potential of many mortgage terms to cause problems in the future, and many claim to have been unaware of those provisions at all.

As you know, the irresponsible actions of various segments of the real estate services community are largely responsible for the housing crisis we now face. Those actions have destroyed the dreams of millions of homeowners and are requiring large federal bailouts from American homeowners and other taxpayers. Many major corporations and trade associations in the mortgage lending and other real estate services sectors have opposed legislative initiatives to reform the regulation of real estate services, and have consistently opposed HUD’s proposed changes to RESPA as well.

At the request of those major real estate sector corporations and trade associations, a number of U.S. Representatives recently asked HUD to withdraw the proposed RESPA changes. We believe that those legislators have been misinformed by industry lobbyists about the impact of the proposed RESPA regulations on American homeowners. We are disappointed that many of these legislators may not fully appreciate the widespread consumer outrage over these and other efforts by major real estate sector corporations and trade associations to preserve the unfair and unethical practices in the residential real estate marketplace that lead us into the current housing crisis.

We believe that HUD’s response to the legislators who requested the withdrawal of the proposed RESPA regulations was fair and balanced. It is appropriate that HUD continue to consider all comments, and make appropriate modifications and improvements to the rule as it moves forward to the rule’s implementation. In that regard our organization and many other consumer organizations have urged that the regulations be made stronger.

As you continue to review and consider all comments on those regulations, we urge HUD to give equal weight to the previous suggestions of our organization and other consumer organizations. While industry lobbying organizations have the right to keep asking HUD to allow them to continue to use tools to mislead and deceive American homeowners, it is important for that HUD also give equal weight to the suggestions of organizations whose primary objective is protecting American homeowners.

The major real estate sector corporations and trade associations need to stop whining and refocus on sound and ethical business practices in order to regain the trust of American homeowners. For these reasons we commend HUD for refusing to bow to their lobbying pressures, and for HUD’s commitment to go forward with the implementation of the new RESPA regulations.

Sincerely,

Bruce N. Hahn

President

CC: The Honorable Ruben Hinojosa; The Honorable Judy Biggert