I want to commend the Chairman of the Financial Institutions Subcommittee, Senator Faircloth, for putting this hearing together. RESPA and the Truth in Lending Act are intended to provide timely and useful information about the costs associated with a mortgage transaction. Recently, there has been increased concern that RESPA, and to some extent TILA, have failed to provide consumers the protection their passage was supposed to ensure. This Banking Committee review of RESPA and TILA is, frankly, long overdue.
Federal regulation of the mortgage settlement industry suffers from two fundamental problems.
First, the consumer is confronted by a blizzard of paperwork required under two separate statutes before closing on a home. The disclosures that are intended to protect the consumer have in a sense become almost meaningless for all but the most discerning home buyers.
Second, business structures have changed and technology is light years ahead of where it was when RESPA was enacted in 1974. These changes have profoundly affected the way real estate settlement services are delivered. It is unclear whether RESPA as it is now written has responded or can respond efficiently to those changes. To this point, at least, attempts by regulators to clarify these issues by regulation have not met with success, and settlement service providers are facing lawsuits because of the lack of statutory and regulatory clarity.
The bottom line is that real estate settlement providers face a confusing, inefficient, time-consuming and complex set of rules that makes compliance costly and burdensome. Ultimately, the costs of this regulation and uncertainty are borne by the consumer who is supposed to benefit.
I believe there is general agreement that RESPA needs reform, and that TILA and RESPA
regulations should be harmonized. I think it is also clear that no one on this Committee relishes
the idea of taking on RESPA/TILA reform unless there is some consensus on the shape those
reforms should take. I hope this hearing will be a useful beginning in the development of that
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