Below is Mr. Kittle’s oral testimony, as prepared for delivery.

“Madame Chairwoman, Ranking Member Chabot, thank you for the opportunity to appear before you.  As a mortgage banker and a small businessman, I am pleased to discuss the changes HUD has proposed to the RESPA regulations.

Since HUD last issued a RESPA rule in 2004, the real estate market has experienced an unprecedented crisis, resulting in severe hardship for consumers and businesses alike.  This crisis has many causes and victims.  The causes range from economic conditions, to real estate prices to outsized investor and borrower appetites. 

The victims include borrowers, but more than that, future borrowers, communities and the economy at large.  While MBA does not believe that the lack of transparency in the mortgage process is the main cause of borrower difficulties, or that its improvement is the only solution, greater transparency could help stem abuses.

The sheer volume and complexity of disclosures today allows abusers to hide in plain sight.  Long before the current market crisis, MBA supported simplification and greater financial literacy.  MBA believes that problems in the industry are a good reason to redouble efforts in both of these areas. 

Greater transparency would better empower consumers to make smart choices, based on their own individual needs.  It would also empower borrowers to compare their initial loan offers to the final costs of the loan, which will help protect against abuse.

In today’s market, people shop more effectively for a new flat screen tv than they do for a mortgage.  We all need to do a better job to encourage increased shopping by consumers and clearer loan information.

The forms that borrowers confront today include the Truth in Lending disclosures, which detail the costs of credit, and the Good Faith Estimate and HUD-1, both of which detail settlement costs.  These forms are required under TILA and RESPA. 

Consumers need to get a clearer, simpler set of forms than these.  So any changes to TILA forms, which are the Federal Reserve’s responsibility, and the RESPA forms, which are HUD’s, should happen together.  Otherwise, additional costs associated with implementing new forms and procedures will fall on consumers and small businesses.  In other words, reform should happen comprehensively, rather than piece-meal. 

HUD has issued its rule and the Federal Reserve has announced that it will work on a new TILA rule.  HUD and the Fed should work together on these reforms.  If they are unable to do that, at the very least, HUD should delay the implementation of its rules until the Fed implements its TILA changes.  Most importantly, the disclosures must work together.  It makes no sense to have TILA, GFE and HUD-1 forms that don’t. 

While we have many issues that are detailed in our testimony, actually improving transparency is the most important.  The HUD-1 and the GFE should work hand in hand.  If nothing else, failing to ensure that they do will be a missed opportunity that will result in continued confusion among consumers.

While simplification of the mortgage process is a high priority for the MBA, we do not believe improvements should unduly harm small businesses. We believe that small businesses operate effectively in all aspects of the mortgage process and should continue to do so. 

The rule as proposed by HUD will have significant effects on both small and large businesses. 

The effects of the proposed rule would include one-time and ongoing costs of the new rules, including increased time and money spent at closing and possibly increased legal liability for everyone involved.  My written statement goes into further detail on these points.

The Mortgage Bankers Association supports efforts to make the mortgage process simpler, clearer and more transparent for consumers.  Doing so will empower consumers and help fight predatory lending. 

The RESPA Rule released by HUD is not simplification.  Consumers need a full reform of the disclosures they see, including both RESPA and TILA that helps them quickly and effectively navigate the mortgage process. 

Public policy should help ensure that the problems we see in the market today do not happen again.  Reforming the mortgage process is an important but difficult task.  It is imperative that we get this right.

One more quick point: I appreciate the five minutes you have given me.  Just imagine if I had to read the entire closing script that HUD proposes.  It would have taken me nine times as long as this statement took me to read.”

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.