Real Estate Closing Costs: Real Estate Settlement Procedures Act (RESPA), Section 14a. Volume III: Alternatives to RESPA

摘要

This volume addresses alternatives to the Real Estate Settlement Procedures Act (RESPA). It considers alternatives which evaluate the extent to which RESPA has fulfilled its purpose and which represent courses of action designed to improve the availability of consumer information and encourage comparison shopping. Three possible alternatives to improve current legislation are outlined and evaluated: (1) repeal RESPA, (2) maintain the status quo, and (3) modify RESPA to improve its effectiveness in providing consumer information and encouraging shopping. This last alternative, which includes six specific recommendations, is advocated. Next, alternatives are addressed that are specifically designed to reduce the cost of each individual settlement service, including brokerage, mortgage lending, mortgage insurance, and title assurance industries. These alternatives must be sensitive to consumer interests. The alternatives presented have the impact of increasing disclosure, encouraging shopping, and directly reducing the costs of specific providers. Finally, a broad discussion is presented of the relative merits of the lender - pay alternative, yet another approach to designing an effective mechanism for reducing settlement costs. The discussion analyzes the plan's essential elements and concludes that, unless there is a reasonable certainty that such a plan will lower settlement charges and that no better mechanism is available to achieve this end, the plan should not be implemented on a national basis. Tables and footnotes are included.