Advisers to the Department of Housing and Urban Development couldn't agree how to fine-tune the Real Estate Settlement Procedures Act, so they gave the agency seven rule proposals before calling it quits this week.
"The fat lady sang," said Paul Mondor, director of regulatory compliance for the Mortgage Bankers Association of America. The advisory group's difficult discussions of proposed rules for the law known as Respa ended Tuesday, he said.
The Department of Housing and Urban Development has struggled more than 10 years to draft implementation rules. The law is broadly aimed at regulating payments made during the mortgage process from lenders to brokers, real estate agents, and others.
Industry interests proved so divergent and contentious as to render rulemaking almost impossible for HUD. Appointment of the advisory group of lenders, trade groups, and consumer advocates was the agency's answer to the stalemate.
Although the committee's six months of discussions failed to produce consensus, all sides agreed they had a better understanding of their opponents' rationales.
During the final phase of talks, seven proposals for Respa rules emerged, and all were offered to Nicolas Retsinas, HUD's assistant secretary for housing.
One, dubbed the lenders' proposal, earned the widest industry support. Backers included the Mortgage Capital Group, the Real Estate Services Providers Council, America's Community Bankers, the Independent Bankers Association of America, the National Association of Credit Unions, and the National Home Equity Mortgage Association.
This proposal recommended that mortgage brokers disclose to borrowers the maximum fee they may get for a mortgage transaction.
Conspicuously absent from the proposal's list of supporters: the MBA. Requiring a broker to disclose a maximum transaction fee is "tantamount to price fixing," said the association's Mr. Mondor. "We regard that as undue interference in the marketplace."
Proposals by consumer advocates called for itemized disclosure of services provided by, and compensation given to, the broker.
And a proposal by the National Association of Mortgage Brokers would require no disclosure by the broker, so long as a market could be deemed "competitive."
"The views of some of those involved were so different that there was just no middle ground," said Robert McKew, general counsel for the American Financial Services Association. The sessions gave many participants a "greater appreciation for the hard work HUD has to do," he added.
A final draft rule will be available in two to four months, Mr. Retsinas told the committee.