HUD to start over on mortgage reform

Better right than fast, secretary says

By MICHELE DERUS
journalsentinel.com

America needs stronger governance of home-mortgage transactions, but reform must be from the ground up, U.S. Housing and Urban Development Secretary Alphonso Jackson said Monday.

With that simple statement, Jackson completed his agency's March 2004 rejection of a sweeping mortgage-reform package introduced several years ago that would have required lenders to more fully disclose fees, charges and restrictions.

"HUD's job right now is to listen to you," Jackson said Monday of his commitment to gauge public opinion. "We begin today," he said in a teleconference with the media.

The now-defunct plan was on the brink of enactment last year when Jackson, then acting secretary, shelved it. At the time, he cited a need for further review and denied the move was meant to pacify Congressional critics who were stalling his nomination as HUD secretary.

HUD predicted its reform plan would save consumers $8 billion a year partly through industry efficiencies and by streamlining the loan application process.

"The plan is not dead," Jackson said then.

The plan is dead, Jackson spokesman Brian E. Sullivan said Monday.

"We're wiping the blackboard clean and starting fresh," Sullivan said.

Sullivan was left to field a barrage of new reporters' questions when Jackson disconnected from media lines right after his brief statement.

"Everybody understands that buying a house today is too complicated," Sullivan said. "When people are told at the closing that they owe hundreds and sometimes thousands of dollars more than they thought, that's a problem. Sometimes there are legitimate reasons for that. But there's also room for greater clarity."

With $55 billion a year in annual mortgage fees at stake, "the devil is in the details," Jackson said in a teleconference media call Monday. "I am more concerned with doing this right than doing it fast."

Starting July 14 in Washington, D.C., the HUD secretary said his agency will host at least six invitation-only discussions around the nation to gauge consumer and industry group opinion on mortgage reform.

The only Midwest session is Aug. 4 in Chicago. No time and site were immediately available.

HUD's authority to alter mortgage lending practices stems from the 1974 Real Estate Settlement and Procedures Act.

The Mortgage Bankers Association, a Washington trade group representing 2,900 real estate finance firms, issued a statement late Monday applauding Jackson's "collaborative approach" and agreeing with the HUD secretary that "any changes to RESPA should be done right, not fast."

No one at Consumer Federation of America or the Association of Community Organizations for Reform Now, two Washington-based public interest groups involved in the mortgage-reform issue, could be reached for comment Monday.

Because its potential fiscal impact exceeds $100 million, Sullivan said, Congress will be consulted on any new HUD rules, although they do not require Congressional approval.