Government Affairs Update
June 21, 2005

Do-Not-Call means Do-Not-Call

According to newspaper reports, The Florida Agriculture and Consumer Service Department sued a Tampa, Florida based Mortgage Broker for violating Florida’s Do-Not-Call law. Filed in the Hillsborough County Circuit Court, the lawsuit accuses the Mortgage Broker of calling at least six Floridians on the Do-Not-Call list during a ten month period. The lawsuit could lead to a fine of $10,000 per violation.

There are also Federal Do-Not-Call regulations Mortgage Brokers who call consumers without permission should follow.

Summary of Other Current Mortgage Broker Regulation and Legislation Activity

1. RESPA Reform Proposals from HUD – After simmering for a little over a year, HUD has turned up the heat on RESPA Reform.

HUD to revisit RESPA reform proposal

The Department of Housing and Urban Development is reportedly preparing for a series of discussions on reviving a proposed rule, previously dubbed the “home buyer’s bill of rights,” under the Real Estate Settlement Procedures Act.

HUD last year withdrew this proposal over broad industry opposition and concern lodged by some lawmakers that it would shut some lenders out of the mortgage market.

The proposal was aimed at earlier, more accurate disclosures of home loan costs under RESPA. That proposal sought to encourage mortgage providers to package their settlement services in order to guarantee the associated costs in return for less detailed disclosure requirements and a safe harbor from unearned fee penalties. Additionally, it called for a guarantee of the interest rate, within a set margin, at the time of settlement.

HUD Secretary Alphonso Jackson and staff have discussed this issue with House Financial Services and Senate Banking Committee members. Jackson wants to have a proposal issued by late fall or early winter, the report said, with a final rule out by the spring of 2006.

· HUD Secretary Alphonso Jackson has been discussing the issue of Real Estate Settlement Procedures Act reform with lawmakers and plans meetings with industry, consumer, political and regulatory interests.

· The Department of Housing and Urban Development is expected to announce as soon as this week that it will hold a series of closed-door roundtables this summer to discuss reintroducing mothballed mortgage reforms. The effort to reform Real Estate Settlement Procedures Act rules could reshape the competitive landscape for the mortgage, realty, and title and settlement industries.

2. Reform of Fannie Mae and Freddie Mac, also known as GSE Reform – (H.R. 1461 and S. 190) Legislation may limit access by Mortgage Brokers to Fannie Mae and Freddie Mac automated underwriting systems. Mortgage Brokers rely on these systems to quickly assess a mortgage application and provide consumers with mortgage credit.

3. Trade Associations Health Care Coverage – (S. 406 and H.R. 525) The "Small Business Health Fairness Act" would give small business the same bargaining power of big business in the health care arena. Remember to contact your U.S. Senators and Representatives using the Call to Action separately provided in this newsletter.

· President Bush supports the Small Business Health Fairness Act

In an effort to help small-business owners provide better health insurance for their employees, President George W. Bush pushed for "association health plans" in a speech to the Associated Builders and Contractors conference.

The plans would allow similar small businesses to unify across state lines and sell health insurance through their trade associations to small businesses.

In a speech that focused on Social Security reform, the economy, foreign relations and energy plans, Bush won applause from several hundred contractors when he said AHPs could help small businesses.

"It means that, if you're a small business in Texas and you're a small business in New Jersey, that you can be in the same risk pool if you share the same type of industry," Bush said. "Obviously, the more people in the pool, the more you spread risk, the lower the cost. ...

Congress ought to allow small businesses to join together so they can buy insurance at the same discount that big businesses get to do, for the sake of health care for small businesses and their employees."

4. Responsible Lending Act – (H.R. 1295) This legislation was introduced by Reps., Bob Ney, R- Ohio, and Paul Kanjorski, D-Pa., to protect consumers against predatory lending practices through revisions to federal statutes affecting lenders, brokers and appraisers.

This legislation includes provisions that will increase the number of loans considered as section 32 (High-Cost Loans) and provides for a Federal Registry for only Mortgage Brokers.

5. Affiliated Business Arrangements, ABAs and One Stop Shops – This issue involves the legality of homebuilders requiring or inducing homebuyers to use mortgage companies affiliated with the builder.

6. The U.S. Department of Labor Administers the Fair Labor Standards Act – and its affect on compensation to commissioned mortgage employees.