On July 21 RESPA to Turn Over Enforcement to Consumer Financial Protection Bureau (CFPB)
On Thursday, July 21, RESPA enforcement will officially move from HUD’s supervision to the newly formed Consumer Financial Protection Bureau (CFPB). The new law states that the CFPB will oversee RESPA, the SAFE act and the Interstate Land Sales Full Disclosure Act as part of their portfolio.
How will this move to a brand new federal agency affect brokers and agents? To make sure that you’re up to speed, RE-Insider secured an exclusive interview with HUD’s Brian Sullivan to explain what this change really means to the real estate industry. This is the first of a two-part interview.
Critics have long contended that, with HUD’s multiple mandates, it has been difficult for the agency to effectively monitor, manage and enforce RESPA violations. With RESPA enforcement now transitioning to an agency with the singular mandate of protecting consumers, many observers believe RESPA enforcement will become more aggressive and companies and professionals more accountable.
Sullivan said that one of the most vexing issues for RESPA is the problem of defining “required use” which will now fall into the lap of the CFPB. RESPA clearly prohibits the seller from requiring the buyer to use one specific settlement service provider, such as a particular title company, for example.
According to HUD’s Sullivan, it’s essential that CFPB define required use to allow for proper affiliations in the marketplace, because forcing people to use an affiliated business is not right.
HUD has been preparing for the transition in RESPA responsibilities for some time, with several RESPA personnel already working at the CFPB on temporary detail, he noted.
According to Sullivan, brokers will really want to pay attention to another significant new element of RESPA that will fall to the CFPB — the new enforcement of yield spread premium disclosure. This requires brokers to fully disclose the payment that lenders gave them for bringing in new business, and then using that premium to offset the total loan origination cost.
Agents and brokers should also know that right now the CFPB is seeking public comment on how best to marry RESPA and the Truth in Lending Act (TILA) into a single disclosure form.
“There are more than a few dozen highly-trained people from HUD moving over to the bureau, so the CFPB will be populated by people who know the issues and have worked with them before. It’s going to be a good thing for the government officials, for agents and brokers, and especially for consumers’ protection,” he added.
“This has been a wild ride, especially during the whole mortgage law definition process. You can’t imagine how many people have an interest in how people buy and refinance their mortgages in this country. If you ever doubt that number, try to promulgate new rules and you’ll find out,” he said.
Stay tuned for part two of our interview with HUD spokesperson Brian Sullivan where we delve further into RESPA’s recent changes and some of the more controversial issues that RESPA is tackling right now.