Guaranteed Mortgage Packages (GMPs,) are part of a RESPA reform proposal being considered by the HUD that would offer homebuyers guaranteed mortgage rates and settlement costs that could not vary at closing. The question is out of who's pocket will the savings come? Brokers and agents may be agreeing with an issue they don't fully understand.

In a new survey "Guaranteed Mortgage Packages: What Real Estate Agents and Broker-Owners Are Thinking," sponsored by Inside Mortgage Finance, Campbell Communications, a market research firm, has found that 84 percent of real estate agents and 82 percent of broker-owners would have moderate or high interest in recommending Guaranteed Mortgage Packages, or GMPs, to their homebuyer customers.

When asked, "What would be your principal incentive in recommending Guaranteed Mortgage Packages to your homebuyer customers?," 51 percent of broker-owners and 68 percent of real estate agents responded "Homebuyer demand/benefits to homebuyers," said the survey. On a related question, 65 percent of real estate agents responding to the survey expected GMP interest among their homebuyer customers to be "high" or "very high." Similarly, 65 percent of broker-owners responding expected "high" or "very high" homebuyer interest.

Reflecting sentiment not only on GMPs, but also on current mortgage practices, the survey said, 82 percent of real estate agents and 72 percent of broker-owners thought that 50 percent or more of homebuyers would prefer a Guaranteed Mortgage Package over the current Good Faith Estimate.

When asked the principal reason homebuyers might prefer a GMP, 40 percent of real estate agents and 41 percent of broker-owners responded "More simple mortgage process," perhaps reflecting frustration with the complexity of current mortgage procedures, opines the survey. Only 28 percent of real estate agents and 31 percent of broker-owners responded that "guaranteed settlement costs" would be the principal reason homebuyers might prefer GMPs. This was in contrast to an earlier Campbell Communications survey of mortgage brokers, which showed that 58 percent of mortgage brokers believe "Guaranteed settlement costs" would be the principal reason consumers might prefer GMPs.

It wouldn't be the first time mortgage brokers and real estate brokers didn't agree, although the survey makes the real estate industry sound amenable to what is a controversial measure proposed as RESPA reform by the HUD. The question is where will the guaranteed costs come from and out of whose pocket?

According to HUD spokespersons, HUD Secretary Mel Martinez would like to simplify the homebuying settlement process so that consumers understand what is happening when they buy and refinance their homes. He also wants to shave about $700 off of the settlement costs in each transaction.

Few dispute that it would be nice to save consumers money by tighter controls on closing packages, but it is a question that is as uncomfortable as "have you stopped beating your wife?"

There's no right answer, because the savings will be coming from the providers answering the question. If the HUD pursues the "single package" closing, then the fear by many title and real estate companies is that the lion's share of the "savings" will come out of the closing agent's hide. With lenders in charge of the package, they would be able to shop packages of closing costs from title companies, which in effect would make them the HMOs of the mortgage loan world. Just as HMOs gather physicians in networks and ask them to charge less for services, lenders would be in the position to do the same thing with title and closing services.

That's why real estate industry organizations including the National Association of Realtors, the Real Estate Services Providers Council, the Realty Alliance, and others oppose the "single package" approach being considered by the HUD, and are asking the HUD to consider a "two package" solution, which they feel would allow their members with ancillary services and other familial ties to title and closing services to compete with big lenders. That way anyone can put together an HMO, er, uh, GMP.

The survey was conducted in October 2003 and received approximately 1,500 responses from real estate agents and 500 responses from broker-owners, on two separate, but parallel survey instruments via e-mail, says the company.

"We were surprised by this level of interest in GMPs," commented John Campbell, president of Campbell Communications, "especially because our survey indicated that only 17 percent of real estate agents and 29 percent of broker-owners had heard of GMPs before taking the survey. I think that this shows GMPs are a concept with powerful intuitive appeal to real estate professionals, who apparently believe that GMPs could expand the market for real estate transactions."

Yet, the survey left out a crucial question - which package proposal would the real estate industry support? "We decided in designing the survey that, for an audience largely unfamiliar with GMPs," says Campbell, "the subtleties of single vs. dual packaging would not be immediately grasped, so we did not explicitly address dual packaging. Also, the objectives of this project were not political."

Lenders seeking GMP alliances with broker-owners could find the market largely untapped, says Campbell. Only 10 percent of responding broker-owners currently have plans to offer GMPs.

Much of the mortgage industry is waiting for a final RESPA rule from HUD, including a GMP provision, before proceeding to offer GMPs, says the survey report. However, three major lenders are currently offering GMPs, including ABN AMRO with its OneFee™ program, ditech.com (a unit of GMAC Mortgage), and E*TRADE Financial, a stock brokerage also offering mortgages. But market penetration has been minimal -- 96 percent of real estate agents reported that none of their homebuyer customers had used the GMP programs of these lenders.