[Congressional Record Volume 143, Number 142 (Tuesday, October 21, 1997)]
[Extensions of Remarks]
[Page E2037]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  CONFERENCE REPORT ON H.R. 2158, DEPARTMENTS OF VETERANS AFFAIRS AND 
HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS 
                               ACT, 1998

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                               speech of

                          HON. MARK W. NEUMANN

                              of wisconsin

                    in the house of representatives

                       Wednesday, October 8, 1997

  Mr. NEUMANN. Mr. Speaker, as a former homebuilder, I have always 
thought that the steps people must take to purchase homes and get 
mortgages is confusing and difficult. I rise today to express my 
concern with a new HUD proposal which threatens to make buying a home 
even more difficult and more expensive for millions of Americans: HUD's 
proposed change to Regulation X which implements the Real Estate 
Settlement Procedures Act [RESPA].
  RESPA was passed in 1974 to address two concerns. First, it requires 
lenders to inform borrowers of the costs they will face once they close 
on a home loan. Second, it prohibits lenders from making referral 
payments to individuals or businesses who recommend their services.
  Congress did not anticipate recent innovations in the mortgage 
banking industry when it passed RESPA. Mortgage brokers now play key 
roles in serving home buyers, particularly those with lower incomes. 
RESPA's outdated approach has resulted in over 50 class action lawsuits 
claiming that lender-paid mortgage broker fees are prohibited because 
they are referral fees, despite the fact that these fees have helped 
cut the closing costs for home buyers.
  Congress has before it a bill I have cosponsored, H.R. 1283, which 
would call a time out on these lawsuits until RESPA can be reformed to 
reflect current market operations. On March 3 of this year, over 30 
bipartisan Members of Congress--including several from the HUD 
Appropriations Subcommittee--signed a letter written by Housing 
Subcommittee Chairman Lazio asking HUD to clarify RESPA's definition of 
lender-paid broker fees to make sure it protects consumers without 
restricting access to affordable mortgage credit. However, this new 
rule could reduce mortgage brokers ability to help people by setting 
fixed fees in addition to requiring fee disclosure.
  As a member of the Subcommittee on VA/HUD and Independent Agencies of 
the House Appropriations Committee, I believe HUD should delay this new 
rule as long as Congress is working faithfully to update RESPA. 
Secretary Cuomo has already committed to delaying the implementation of 
similar RESPA rule regarding employee compensation while Congress works 
to reform RESPA. I am hopeful similar consideration will be given to 
proposed changes to Regulation X. I am confident that in the end, 
Congress will approve a new law that makes it easier for both consumers 
and lenders.

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