The Office of Management and Budget, which operates by Executive Order from the President of the United States, has put off until April 14th its decision to accept, reject or send back for further deliberation a new RESPA reform rule proposed by HUD which will change the way real estate closings are done through guaranteed mortgage packages (GMPs.)

Concerns that the new rule proposed by the HUD will have only a single-package closing option has many in the real estate industry fearful. A single-package closing will put lenders in charge of negotiating closing services fees, which could pressure title companies and closing services, much like HMOs pressure doctors and medical services to cut fees, while their own profits are unchecked.

"The title industry was concerned about preemption of state consumer protection and title insurance laws and the lack of statutory authority to promulgate such revisions in the RESPA rule," explains Amanda Paskiet, editor of Respareform.com. "Mortgage brokers and appraisers have been concerned that it will negatively impact small businesses, consumer groups have been concerned about the GMP -they believe it should include an interest rate and closing cost guarantee to allow homebuyers to truly shop for the best deal."

Realtors have been concerned, too. While most Realtors support guaranteed mortgage packages, they are reluctant to see lenders put in charge of the packages, and prefer to see HUD adopt a two-package rule that include separate packages for mortgage and closing services.

Says Sue Johnson, spokesperson for the Real Estate Services Providers Council, Inc., "If HUD picks one package, the results will be less competition in marketplace. You won't have title and closing providers that have the ability to offer services to consumers directly. A significant percentage of brokerage and builders offer title services directly to customers and the customers can choose to use them with a myriad of lenders in the marketplace. Under a single package, if the federal government adopts the single package, they would be telling these title and closing providers that they can't offer their services directly to customers but must offer their services through lenders if they want to be included in a guaranteed package. We feel that is an unnecessary intrusion into the free marketplace."

Other questions have been raised by members of Congress including 220 members of the House of Representatives who signed a letter asking the OMB to have the rule reproposed and not to accept HUD's rule as "final."

The OMB has an extra month to review the proposal, but there has been no reproposal to date. For that reason, rumors are rampant that the HUD has proposed a single-package closing for OMB approval.

According to the National Association of Realtors, the OMB is currently reviewing the HUD's "final" RESPA rule "to determine the validity of the agency's economic impact analysis. Nearing the regulatory deadline, it is anticipated that OMB will issue a ruling shortly."

The NAR says it has met with OMB on two occasions to provide its assessment of the RESPA rule's impact. A recent NAR-issued call-for-action to REALTORS® asked members to urge their member of Congress to write to OMB and demand that they return the final rule to HUD with instructions to revise and resubmit for additional comment. The call-for-action resulted in approximately 30,000 letters being sent to Congress.

NAR was instrumental in generating a bipartisan "Dear Colleague" RESPA letter circulated by U.S. Reps. Judy Biggert (R-Ill.) and Ruben Hinojosa (D-Texas) to all House offices seeking signatures on a joint letter to OMB, the letter referenced above that generated 220 signatures.

In addition, other House and Senate members submitted individual letters to the OMB.

"It is out of HUD," explains Johnson, "and unless OMB sends it back, then it would be published as a final rule. So the ball is in OMB's court. The administration has the option of converting the single package into two packages, what we are telling the administration is that to adopt a true two-package approach means that a lender wouldn't be able to require that a consumer purchase both packages and a lender wouldn't be able to reject someone else's package. If the administration goes forward, it will be a two-package approach in name only without those two restrictions."

Why is the government forcing the packaging issue? "I think there was a fundamental lack of understanding of how much packaging is already in the marketplace," suggests Johnson, "and how many different types of companies are doing packaging beyond lenders. We keep trying to educate them."

The OMB's responses varies. "Sometimes we are encouraged by the number of questions," says Johnson, "and other times they simply listen but they will not indicate where they are headed. OMB is prohibited by Executive Order from indicating or revealing the substance of their deliberations."

But there's hope for the real estate industry yet. It was at HUD's request that the OMB extend its review for 30 more days.

"The RESPA rule currently under review is a complex document supported by an extensive economic analysis," says a HUD spokesperson. "As a result, HUD and OMB require additional time to explore all of the comments and questions raised by the review."

"I hope the final rule does address the issues of the rule that make the proposed one truly unworkable," says Paskiet. "And I don't envy the difficult task HUD has in addressing those concerns and coming up with a rule that is workable for the entire real estate industry."

Published: March 17, 2004

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.