Reform of RESPA Should Facilitate Bundled Services.(Brief Article)

Housing secretary Mel Martinez's proposal to revamp the mortgage application and settlement process does not stop at simply providing guaranteed closing costs or clearer disclosures of origination fees.

"The process of financing and refinancing a home is too complicated, too costly and too much of a mystery for many borrowers. Reforming RESPA is the right thing to do," secretary Martinez said in a speech at the National Press Club.

Secretary Martinez said the proposal would open the door to the packaging or bundling of settlement services so lenders could guarantee closing costs to consumers.

For lenders who do not guarantee closing costs, the proposed rule would require more accurate and firmer good-faith estimates.

Secretary Martinez did not provide specifics about his RESPA reforms because the proposed rule has not been cleared by the Bush administration. This lack of detail disappointed many Washington interest groups and lobbyists.

But Mortgage Bankers Association chairman-elect John Courson said he was very pleased with reform proposal outlined in the speech.

"Based on the secretary's presentation, it is clearly something we would applaud and contains the elements that have been in our reform proposals for a number of years," Mr. Courson said.