On Wednesday, August 25, 2010, NAR submitted comments in response to HUD's Advanced Notice of Proposed Rulemakeing (ANPR) on "Required Use" under the Real Estate Settlement Procedures Act (RESPA). "Required Use" is forbidden under RESPA in most circumstances. However, HUD had concerns about de facto "Required Use" where the incentives to use an affiliated business were so great that consumers had little choice than to use the affiliate. HUD initially issued new rules as part of the RESPA reform of 2008. However, the National Association of Homebuilders successfully challenged the rule. HUD then withdrew the "Required Use" portion of its rule. This ANPR is an attempt to achieve a compromise that satisfies the industry, consumers, and the courts.

In the initial rulemaking, NAR successfully argued that the de minimis incentives provided by real estate firms and their affiliates does not constitute a "Required Use" situation. In our comments, we continue to advocate this position and suggest that HUD draw the line on required use where the incentive exceeds the price of the affiliated service.  The following is a letter from 2010 NAR President, Vicki Cox Golder, CRB

August 25, 2010

Regulations Division
Office of General Counsel
Department of Housing and Urban Development
451 Seventh Street, SW, Room 10276
Washington, DC 20410-0001
Re: Docket No. FR-5352-A-01, Real Estate Settlement Procedures Act (RESPA) Advanced Notice of
Proposed Rulemaking (ANPR): Strengthening and Clarifying RESPA’s “Required Use” Prohibition

Dear Sir or Madam:
The National Association of REALTORS® (“NAR” or “Association”) thanks you for the
opportunity to provide comments to the above-referenced ANPR under the Real Estate Settlement
Procedures Act (“RESPA”). These comments are submitted on behalf of NAR and the Association’s
1.1 million members.
The National Association of REALTORS® (NAR) is America’s largest trade association,
including NAR’s five commercial real estate institutes and its societies and councils. REALTORS®
are involved in all aspects of the residential and commercial real estate industries and belong to one or
more of some 1,400 local associations or boards, and 54 state and territory associations of
REALTORS®.
The “Required Use” Rule
While NAR had concerns with the 2007 proposed rule on required use, our members
generally agreed those concerns were addressed with the 2008 final rule. NAR members value the
ability to provide consumers with appropriate and reasonable incentives to use affiliates that do not
constitute a de facto “required use.” For example, a 1/4 point discount on interest rate for using an
affiliate provider such as a title company is eminently reasonable. The consumer can still shop for
rates on mortgage and costs for title settlement services and compare whether the package deal
offered is truly worthwhile. This is also consistent with the goals of the reform. The new GFE offers
tools for just this type comparison.
NAR also understands the potential dangers to consumers when the incentive is so great that
consumer feels compelled to use the service provider. Recent litigation certainly calls into question
whether such a de facto “required use” is covered by RESPA for a variety of reasons. A possible
bright line test might be that if the face value of the incentive exceeds the value of the services provided, the incentive’s true value may be reasonably questioned. So if one is offered a $5000 discount contingent on using settlement services valued at $2000 it would call into question the true value of the $5000 discount.
One Stop Shopping
In 2008, NAR contracted with Harris Interactive in 2008 to gauge consumer sentiment on one stop shopping.1 Respondents had the following reaction when asked about the advantages and disadvantages:
The biggest perceived advantages are: saving money because of discounted prices (77%), increased efficiency and manageability (73%), convenience (73%) and things not falling through the cracks (73%). The most commonly perceived disadvantages are that consumers can’t compare rates across different providers (15%) and that one company is responsible for all aspects of the process (13%).
NAR plans to update the study periodically to retest consumer reaction and provide additional information to our members.
Thank you for your time and consideration in this matter. If we can provide any further information or clarification of the views expressed herein, please do not hesitate to contact our Director of Real Estate Services, Ken Trepeta at (202) 383-1294 or ktrepeta@realtors.org.

Sincerely,
Vicki Cox Golder, CRB
2010 President
National Association of REALTORS®

 A study from Bankrate found that 90 percent of owners do not regret buying their home.

The findings also revealed improved mortgage awareness, with only 8 percent of home owners in the dark about what type of loan they have -- down from 26 percent two years ago.

The poll of 1,001 randomly selected home owners in August showed that 79 percent had fixed-rate financing, and this type of mortgage was used by almost 90 percent of respondents who make more than $75,000.

Source: Realty Times, Broderick Perkins (09/02/10)

Will the government revive tax credits to encourage home sales? Housing experts are dubious.

Even suggesting that the tax credit might be revived could have a negative effect on the market, says housing economist Tom Lawler, because it could “lead many a prospective home buyer to hold off on buying a home.”

Earlier this month Richard Dugas, CEO of PulteGroup Inc., said earlier in August on an earnings call: “Almost regardless of how future demand plays out, we still believe that the tax credit had to end. We need to know the true level of demand without government stimulus distorting the market so that we can continue to properly position our business for ongoing improvement.”

Source: The Wall Street Journal, Nick Timiraos (08/30/2010)

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

· Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.
· Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.
· Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.
· Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.
· Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)

The wave of foreclosures appears to be subsiding slightly. According to data from Mortgage Bankers Association’s National Delinquency Survey:

• The percentage of loans on which foreclosure action were started during the second quarter was 1.11 percent, down 12 basis points from last quarter and down 25 basis points from one year ago.

• The percentage of loans in the foreclosure process at the end of the second quarter was 4.57 percent, a decrease of six basis points from the first quarter of 2010, but an increase of 27 basis points from one year ago.

• Loans that were 90 days or more past due or in the process of foreclosure was 9.11 percent, a decrease of 43 basis points from first quarter, but an increase of 114 basis points compared to the second quarter of last year.

“The good news is that foreclosure starts are down, and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006 and had the largest drop since 2005,” says Jay Brinkmann, MBA’s chief economist.

The bad news is that the percent of loans one payment behind had peaked in the first quarter of 2009 at 3.77 percent and fell to 3.31 percent by the end of 2009. Now that rate has risen to 3.51 percent.

“Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers,” Brinkmann adds.

Source: Mortgage Bankers Association (08/26/2010)