The Honorable Shaun Donovan,

Secretary

U.S. Department of Housing and Urban Development

451 Seventh Street, S.W.

Washington, D.C. 20410

Dear Secretary Donovan:

Tuesday and Wednesday President Obama will travel to Denver and Phoenix, where he will discuss solutions to the home foreclosure crisis that faces 10,000 people every day. The causes of the crisis are many. Notable among them were the abandonment of sound underwriting practices by mortgage lenders, and their successful and ongoing efforts to thwart transparency and better consumer understanding of the terms of mortgages. Current estimates of the price tag for remedying these misdeeds are in the range of $50 billion to $100 billion, and that amount will probably turn out to be low.

Among the ongoing efforts to thwart transparency and better consumer understanding of the terms of mortgages were the successful efforts by mortgage lenders to water down proposed changes to RESPA rules. Consumer groups like ours sought to strengthen those rules, but lender groups succeeded in persuading the Bush Administration to water them down further.

The result was the pending Real Estate Settlement Procedures Act (RESPA) rule published by the Bush Administration on November 17, 2008. It represents a modest improvement over the current rule, and is as far as the Bush Administration was willing to bend in satisfying the requests of its allies in the mortgage financing sector.

We understand that eight mortgage lending groups have requested that this rule be withdrawn. They cite Rahm Emanuel’s memorandum requesting the heads of executive departments and agencies review of new and pending regulations. This memorandum permits agencies to consider extending the effective date for regulations 60 days and reopening the public comment period for 30 days.

We support such extensions in cases where the interest of consumers would be hurt by the implementation of such regulations. This is not the case with the proposed RESPA regulation. Such an extension would be a victory for the companies that have caused the mortgage crisis, and would send precisely the wrong message at a time when President Obama is seeking to help homeowners who face foreclosure. Many of those homeowners might have avoided their current challenges had the new RESPA rule been in effect when they financed their home.

We support further reforms of RESPA. Our suggestions to your predecessor in that regard are enclosed. Substantial additional reform of RESPA rules will take time and will not be in any way precluded by the implementation of the pending rule in the interim. We therefore request, on behalf of the nation’s homeowners, that you allow the proposed rule to be implemented, and that HUD then begin a new and thorough review of RESPA rules leading to additional consumer protections and strengthening of RESPA rules in the future.

Sincerely,