1/16/08 RESPA UPDATES

Here is an article that you might find interesting and useful. It affects all of us who are licensed with the DRE.

RESPA released this article regarding the enforcement of compliance.

NOTE* Certain lenders avoid sending out RESPA and Disclosures because they have alternative motives, they are lazy or they do not know what they are doing. DRE requires lenders, that it is mandatory RESPA is sent out within 72 hours of a lender either quoting rate or pulling credit. The main reason for this law is so that consumers understand what they are being charged and what the parameters of the loan are. This is how RESPA is cracking down.

I hope this helps.


Issue Date: RESPA News Monthly January 2008, Posted On: 1/2/2008 HUD reports sharp increase in RESPA response efforts
The real estate market may be down, but HUD's RESPA activity is up...way up, according to a new report released by the agency showing that the number of RESPA inquiries and complaints HUD’s RESPA office handled in 2007 was remarkably higher than the year before. HUD also showed an increase in the number of enforcement actions and touted the novel ways it had handled certain RESPA issues in the past year. Read on for a look at the report and to see how HUD’s enforcement continues to rise.

By Robin Wardzala

The real estate market may be down, but HUD's RESPA activity is up...way up, according to a new report issued at the end of 2007 by HUD’s Chief Financial Officer.
The agency's Performance and Accountability Report for FY 2007 summarized (in 447 pages) HUD’s activities over the past year.

The report was broken up into sections corresponding with HUD’s six strategic goals. Notably, while “Increasing Homeownership Opportunities” was HUD’s eighth goal in 2006, in 2007 it ranked as number one, reflecting an apparent rise in the importance of that issue.
As a part of that issue, HUD denoted a sub-goal of “making the homebuying process less complicated and less expensive” which covered its activities under RESPA.

In the 2007 report, HUD noted that it currently receives RESPA inquiries and complaints from consumers, industry and other state and federal regulatory agencies by mail, telephone, and e-mail. The FY 2007 goal was to respond to 3,000 of these inquiries and complaints.

Skyrocketing numbers However, the RESPA office "responded to 6,622 inquiries and complaints during FY 2007. This number exceeds the goal by 121 percent,” HUD said in its report.
This marks a huge increase in the number of inquiries the RESPA office is responding to, as in FY 2006, the department only responded to 1,355 complaints.

According to the report, HUD’s RESPA office “anticipated that by increasing public awareness of enforcement, an increasing number of consumers, industry, and other regulatory agencies would file complaints alleging violations of the act. This increased public awareness has helped bring additional violations of the act to the attention of the department and enabled the department to provide greater assistance to the public, particularly consumers.”

The report added that “the office also was involved in public affairs and outreach by providing training to state and federal regulatory agencies, speaking at industry conferences … [and] providing information to various news agencies … to help increase consumer awareness.”

Industry pays out $6 million
The 6,622 complaints and inquiries the office responded to in 2007 “included questions and complaints from industry, consumer, and state and federal regulators regarding practices that violate RESPA,” HUD said.

“Consumer redress cases returned over $1 million to consumers who complained about unearned fees, misapplied loan payments, unpaid property taxes and unpaid insurance premiums. The office closed 12 formal executed settlement agreements resulting in payments of over $5 million,” the report continued. “Additionally, two agreements were coordinated with state regulatory agencies. In one case, the Department of Justice filed a federal lawsuit on behalf of HUD for violations of [RESPA].”

Curiously, of the 12 closed settlements HUD reported, only nine were publicly announced. Collectively, those nine represented the results of three investigations.

HUD’s reported 12 settlement agreements in FY 2007 also exceeded FY 2006, when HUD announced eight individual settlements, which represented the results of three investigations. That number still fell short of the record number of settlements HUD reached in 2005, when it chalked-up a total of 14 agreements.

The year to come
Regarding HUD’s RESPA goals for 2008, its budget statements indicate that its priorities lie in undertaking reform of the RESPA regulations.
As of press time, the RESPA reform rule was still marked as being under review at the Office of Management and Budget, but sources have indicated that it could be released as early as January 8.


Final Thought…

The man who makes a success of an important venture never waits for the crowd. He strikes out for himself. It takes nerve, it takes a great lot of grit; but the man that succeeds has both. Anyone can fail. The public admires the man who has enough confidence in himself to take a chance. These chances are the main things after all. The man who tries to succeed must expect to be criticized. Nothing important was ever done but the greater number consulted previously doubted the possibility. Success is the accomplishment of that which most people think can't be done.

~C. V. White