ClosingCorp Urges RESPA Changes to Help Consumers Shop for Real Estate Closing Services |
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By: ClosingCorp Posted: 2008-09-22 23:46:36 |
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Consumers will be discouraged from shopping online and saving on title insurance and other real estate closing services unless the Department of Housing and Urban Development (HUD) makes a number of changes in a pending rule to reform the Real Estate Settlement Practices Act (RESPA), according to formal comments filed earlier this year and released today by ClosingCorp Inc., a San Diego-based information services company. ClosingCorp is creating the Web's largest and most comprehensive database and online service allowing consumers and professionals to shop and obtain instant quotes for real estate closing services, often with "e-commerce" discounts (Closing.com). The pending RESPA rule was the subject of hearings last week by the House Committee on Financial Services' Subcommittee on Oversight and Investigations.
Consumers historically have not shopped for title insurance and closing services, according to a 2007 study by the General Accountability Office, and the GAO recommended that HUD improve consumers' ability to shop for title insurance based on price. Given this history, ClosingCorp urged HUD to consider additional modifications to the proposed Good Faith Estimate, to better emphasize that shopping for real estate closing services is in consumers' best interests and to refer consumers and professionals to actual Web sites or other sources of information that will assist in their evaluation of settlement services and providers. "The Internet has already transformed real estate search. Now we are harnessing the power of the Internet to demystify the settlement process, and make real estate closing services more comprehensible for the average consumer and more competitive for everyone," said ClosingCorp CEO, Tony Farwell. "We share the same goals as HUD--transparency of information for the public, consumer choice among providers, and, ultimately, lower costs to providers and lower prices for consumers--but we believe the pending rule is flawed and fails to achieve HUD's mandate as set by the GAO. Rather than frightening consumers into selecting a mortgage lender's pre-selected group of providers, we suggest that HUD affirmatively tell consumers that comparison shopping, facilitated by the Internet, is an effective and empowering way to lower their real estate closing costs, including costs for title insurance and settlement services." Under the Good Faith Estimate provision of the proposed rule, a mortgage lender can guarantee to its customers that the price of its designated vendors' settlement services will not increase by more than 10 percent at closing. If, however, borrowers elect to shop for their own real estate closing service providers, they have no such protection. "It should be no surprise that a borrower, when faced with this choice, will decline to shop for settlement service providers and be relegated to use those vendors pre-selected by the lender," the company said in its comments. ClosingCorp urged that HUD provide consumers who prefer to shop for their own real estate settlement services with clear information as to what services they can shop for; explain that they may find lower rates or more acceptable providers on their own; and even refer consumers to online or other resources that will assist them in comparing vendors and prices, or even initiating a transaction. Alternatively, HUD could provide these links and references on a newly-created consumer assistance page on its own Web site. ClosingCorp's primary site, Closing.com, is currently in Beta release and is scheduled for general release during the first half of 2009. It is the largest one-stop-shop for real estate closing services on the Web with more than 250,000 vendors offering services in 12 categories, with more scheduled to be added. Closing.com helps consumers and real estate professionals find and compare real estate closing services in their geographic area. Real estate service businesses can list and manage their company information on Closing.com using simple, web-based tools. Visitors can learn more about a real estate service provider's products and services, make inquiries and initiate transactions online from one, easy-to-use Web site. Comparative pricing data will be added to the site in the coming months. In October 2007, in partnership with the California Land Title Association, ClosingCorp introduced the TitleWizard(R) (http://www.CLTA.TitleWizard.com), a free, Web-based tool that makes it easy to shop and compare title insurance rates and policies in the State of California. The California Department of Insurance now refers consumers to the TitleWizard, from a link on the home page of its Web site (http://www.insurance.ca.gov). ClosingCorp's mission is to be the leading online destination for consumers and professionals to shop for real estate closing services. ClosingCorp, headquartered in San Diego, California, is an independent information services provider that neither owns nor endorses any of the real estate services listed on its family of Web sites. |
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