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OAIT

Ohio Association of Independent Title Agents

September 1, 2010

VIA OVERNIGHT MAIL


David H. Stevens
Regulations Division
Office of General Counsel
U.S. Department of Housing and Urban Development
451 7th Street, SW
Room 10276
Washington DC, 20410-0500

Re: Real Estate Settlement Procedures Act (RESPA): Strengthening and Clarifying
RESPA's "Required Use" Prohibition Advance Notice of Proposed Rulemaking
Docket No. FR-5352-A-01

Dear Commissioner Stevens:

On behalf of the independent title insurance agents, independent title insurance underwriters and
interested title insurance industry stakeholders who are members of our organization, please
allow me to formally introduce you to the Ohio Association of Independent Title Agents
(OAITA — www.oaita.org) OAITA was formed in August, 2008 by concerned independent title
insurance agents from across Ohio who are determined to foster transparency, promote education
and understanding and preserve the value of the land title process.

OAITA is the only state land title association in the United States that comprises its complete
organizational document on the issues affecting independent land title insurance agents and like-
minded independent real estate settlement service providers. Moreover, OAITA is the only land
title association in the United States that has recently surveyed the general public concerning the
impacts of controlled business arrangements on the real estate settlement process. Information
concerning our settlement preference survey is provided herein. OAITA is uniquely situated to
make comments regarding HUD's Advanced Notice of Proposed Rulemaking (ANPR) because
OAITA has extensive experience and knowledge of the harms caused by affiliated business
arrangements (also known as controlled business arrangements or CBAs).

OAITA — along with the National Association of Independent Land Title Agents (NAILTA) --
has been vocal in its stance against the proliferation of CBAs in the title insurance industry.
Both organizations believe that CBAs unfairly restrict healthy competition in the title insurance

216 Bradenton Avenue, Dublin, OH 43017


www.oaita.org (216) 373-2800
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Letter to Commissioner David H. Stevens
September 1, 2010

industry, create inexorable conflicts of interest between referral sources, land title agencies and
their consumers at the closing table, and impair the traditional barriers of access to the insurance
process — all to the detriment of homeowners and borrowers.

We are pleased to take this opportunity to address you and your staff in connection with the
ANPR to strengthen and clarify the prohibition against the "required use" of affiliated settlement
service providers in residential mortgage transactions under section 8 of RESPA. 1 The goals of
the ANPR mirror those that OAITA has sought since its founding. However, we believe that
more work is needed as the ANPR seems too narrow to properly address the problems caused by
CBAs. With this in mind, OAITA advises HUD of the following and asks that it be included as
an interested industry stakeholder for purposes of further developing and implementing the final
rule.

I. Introduction and Background.

Title insurance may be one of the least understood and most maligned forms of insurance
available to the American consumer. Since its inception in 1876, title insurance has suffered
from the same problem -- the inability of the producer to effectively communicate its value to the
consumer. The reasons for the breakdown in communication are plentiful. The most important
of which is the fact that title insurance is not marketed to the ultimate consumer of the product.
Instead, it is marketed to the referral source (i.e. the real estate firm, mortgage company,
homebuilder, lender, developer) who, in exchange for the referral, often times receives incentives
or other kickbacks to encourage the affiliation. Consumers rarely participate in the process of
selecting their title insurance provider and often, whether voluntarily or involuntarily, defer the
selection of title insurance provider to the referral source. As a result, title insurance is a closed
system of competition.
The harms of unfair competition in the title insurance industry have been well-documented.2
Since the 1990's, the title insurance industry has been slowly devolving into a form of quasi-
casualty insurance. With the help of massive lobbying efforts on the part of banks, mortgage
companies, home builders and real estate companies, the title insurance industry has been
collectively overrun by its referral sources. The title insurance industry, which continues to be
dominated by four national title insurance underwriters controlling over 90% of all title business
conducted in the United States, has tacitly supported referral source infiltration as a means to
acquire additional market share. Unfortunately, in doing so, the title insurance industry has
allowed this referral source infiltration to color its perception of risk to the insurance product.

I Fed. Reg. 31334, Vol. 75, No. 106, Thursday, June 3, 2010.
2 Jack Guttentag, "Real Estate Settlement Services Take Bite Out of Borrowers," Inman News, September 6, 2005;
see also, The Pricing and Marketing of Insurance: A Report of the Department of Justice to the Task Group on
Antitrust Immunities, January 1977, Pages 250-274; "Chapter XII The Title Assurance and Conveyance Industries"
of Real Estate Closing Costs, RESPA, Section 14a, Volume II Settlement Performance Evaluation prepared by Peat,
Marwick, Mitchell and Co. for the Department of Housing and Urban Development, October 1980; State of
California Department of Insurance Bulletin 80-12, December 24, 1980, Subject: Insurance Code Section 12404 -
Unlawful Rebates; Title Insurance Advisory Committee Final Report to the State Board of Insurance, September
1986; Nelson Lipshutz, The Regulatory Economics of Title Insurance, Praeger Press, Westport, CT, 1994, page 5;
Ohio Rev. Code § 3953.26.
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Letter to Commissioner David H. Stevens
September 1, 2010

Speed has been prioritized over safety. Short term profits and controlled market shares have
been emphasized over long term sustainability and the overall health of the title industry.
In the same period that referral source infiltration has blossomed, claims have dramatically
increased. Likewise, historic standards of title abstracting have been degraded by the national
title insurance underwriters in order to accommodate the hastened approach to real estate
closings preferred by these referral sources. Current-owner searches on purchase transactions,
title insurance without title searches and risky offshore title search plants have been embraced to
the equal detriment of homeowners and insureds. Not surprisingly, these changes have helped
increase the claims-loss ratios of every single title insurance underwriter who permitted them.
a. Controlled business arrangements and "one-stop" shops.
The referral sources that oppose changes to the "required use" definition of section 8 of RESPA
seek the ultimate transformation of the title insurance industry by promoting two related
concepts -- controlled business arrangements 3 (CBAs) or affiliated business arrangements
(AfBAs) and "one-stop" shopping or bundled services. The idea is that title insurance and the
other bundled services that accommodate the referral source's business are simply means to an
end, rather than important independent services in their own right.
"One-stop" shopping is a concept closely aligned with CBAs and a term of art that describes the
process that referral sources wish to employ upon the title insurance industry and other
settlement services. "One-stop" shopping is designed to bundle all real estate settlement services
(i.e. mortgage lending, title insurance, appraisal, survey and real estate brokerage) under one
entity in order to provide purported cost savings to consumers and to hasten the process of
settlement. Unfortunately for homeowners and borrowers, the supposed advantages of "one-
stop" shopping are largely unknown and speculative. 4 Meanwhile, the conflicts that are created
in the quest for expediency help to undermine the traditional barriers to access that have kept title
insurance historically separate from its incentivized partners.

b. The "One-Stop" Shop Convenience Myth.

The results of "one-stop" shopping have had no demonstrated positive impact on American
consumers. This fact is even true to the proponents of the concept who refer to the benefits of
"one stop" shops as being nothing more than "potential." 5 However, closing costs are not truly
lower with "one-stop" shops compared to independent settlement providers and faster
settlements have not lowered title insurance claims or real estate-related litigation. 6 Recent
studies paid for by the referral sources who oppose a stronger "required use" definition have
concluded that 70% or more of homeowners and borrowers are completely unaware of what a

3 24 CFR § 3500.15(a).
4 http://www.realtor.org/diversified re firms/20080501 one stop shopping
5 http://banking.senate.gov/02 05hrg/052302/hanna.htm (visited August 2, 2010)
6 http://caare.org/main/wp-content/uploads/2008/12/executivesummaryattorneysurvey122008.pdf
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Letter to Commissioner David H. Stevens
September 1, 2010

"one stop" shop actually provides. 7 Further, the data suggests that only one respondent in five
(22%) preferred a settlement service provider that was affiliated with their real estate firm.8

Complicating the trustworthiness of the surveys conducted by those in favor of "one stop" shops
is the fact that the studies have no statistical margin for error. 9 Consequently, their value is of
questionable merit. Respondents to the cited studies were new home buyers and future home
buyers who were willing to participate in the study and were online visitors prompted by the
members of NAR to complete the survey. 10 The information gained from the study has
numerous built-in biases and control errors. To highlight these deficiencies, the survey questions
used by the pollster were apparently skewed to arrive at a result favorable to the use of "one-
stop" shops, despite no empirically supported need to do so.

For instance, respondents to the Harris Interactive Poll commissioned by the National
Association of Realtors (NAR) in 2008 were asked the following question:

"If you could purchase all or most of the necessary services or products for
buying a home from one company, in your opinion, how much easier would that
make buying a home?"11

Clearly, the survey question presupposes that, in fact, "one stop" shops are easier for buyers to
use. There is no data to support this presupposition. However, the "loaded" nature of the survey
question does not end there. The survey then lists the following required selections:

"(1) A great deal amount easier; (2) A fair amount easier; (3) Somewhat easier;
and, (4) Not at all easier."

Three of the four required responses fed the desired narrative of the survey data (i.e., that "one-
stop" shops are "easier" for consumers). Not surprisingly, 96% of respondents to this question
answered it with one of the three presupposed positive responses. The biased nature of the
questioning did not end there.

"For each of the following items please indicate if you think one-stop shopping (getting
all services from one firm) is an advantage or disadvantage when purchasing all of the
necessary services or products for buying a home."12

The responses to this question were: (a) advantage; (b) neither; or (c) disadvantage. The sub-
questions to apply the above responses to were as follows:

Ittp://www.realtor.org/wps/wcm/connect/26edd6804a7ad6f3a68abf72b4e3ecdd/NAR+Survey+2008.pdf7MOD=AJ
PERES&CACHEID=26edd6804a7ad6f3a68abf72b4e3ecdd (visited July 30, 2010)
8 http://www.realtor.org/diversified refirms/20080501 one stop shopping at p. 8 (visited August 30, 2010).

9Id.at5.
1° Id. at 5.
11 1d. at 49.
12 Id. at 55.
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Letter to Commissioner David 1-1. Stevens
September 1, 2010

"(1) Saving money if companies offer these services at discount prices;


(2) Making the home-buying process more efficient and manageable;
(3) Having just one person to contact, making the process easier to manage and more
convenient;
(4) Preventing things from falling through the cracks;
(5) Having agents and other service providers working together to ensure completion of
the transaction;
(6) Having the ability to direct complaints to one source;
(7) Having knowledge about the local community;
(8) Having the ability to compare rates across a variety of providers;
(9) Having all agents and other service providers equally invested in the outcome;
(10) Having one company be responsible for the entire process; and,
(11) Getting one standard level of brand-named service."

Again, the sub-questions and responses presuppose positive outcomes. There is no mention in
the question that the fundamental concept of one-stop shopping is that the referror receives a
payment, dividend, and/or thing of value in exchange for the referral and thus is in position to
obtain benefit regardless of the product or service. Not surprisingly, three-out-of-four
respondents answered the question indicating that "one-stop" shops were an advantage to
consumers. 13

In data collection and survey circles, 14 the survey data in support of "one stop" shops is
unreliable. This is just one of many similar suggestive questioning patterns found in the NAR-
sponsored survey.

Most important for the purposes of this discussion is the fact that the NAR-sponsored survey did
not query respondents concerning possible conflicts of interest that exist when referral sources
such as real estate firms own financial interests in the settlement companies that are being
referred the real estate firm's settlement business. Instead, the questions provided to the
respondents were from a narrative that was designed to characterize "one-stop" shops as having
no negative biases and were free from any suggestion of the terms "kickbacks," "conflicts of
interest," and "steering" which are common ways "one stop" shops provide for their services.

Unfortunately, the NAR-sponsored survey will be the same data that the NAR and other "one
stop" shopping supporters will use to once again support the idea that there is widespread
support and understanding of the use and value of "one stop" shops outside the referral source
community. To the contrary, this belief is false and unproven. OAITA urges HUD to not
conclude that "one-stop" shops are per se beneficial to consumers because that much remains
uncertain. OAITA also asks HUD to consider other sources of information, including OAITA' s
recently conducted survey that concluded information to the contrary of the NAR sponsored
2008 survey.

13 Id. at 55.
14 http://changingminds.org/techniques/nuestioninWloaded auestions.htm (visited July 30, 2010).
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Letter to Commissioner David H. Stevens
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c. The Law of Unintended Consequences: Revising "Required Use"


Without Revising the Fundamentals of CBAs Will Only Exacerbate
Problems Within RESPA Section 8.

It cannot be overstated. Referral source participation in the business of title insurance presents
homeowners and borrowers — the ultimate consumers of the title insurance product — with an
inexorable conflict of interest between the settlement service providers who close the loan and
their consumers. Thus, creating exceptions to the anti-kickback provisions of RESPA Section 8
serve only to exacerbate the conflict. The only way to truly address the conflict is to either
mandate that all CBAs are illegal and against public policy — a legislative step beyond the power
of HUD, but certainly supported by OAITA — or revise the CBA disclosure into a conflict waiver
in such a way as to require informed consent of the conflict.

Current CBA disclosures are ineffective to provide consumers with the ability to understand the
conflict and knowingly waive it. Current CBA disclosures allow referral sources (i.e. banks,
mortgage companies, real estate firms, homebuilders and developers) to merely disclose the
financial interest without explaining how that financial interest contributes to the potential
conflict. In any other profession, this type of disclosure would not be enough. It is time for real
estate settlement services, including title insurance, to join the ranks of professionals who either
refuse to entertain the conflict or who provide their customers with information concerning the
conflict sufficient to provide informed consent.

II. The OAITA Settlement Preferences Survey:

In the fall of 2009, OAITA conducted the first phase of a statewide settlement preference survey
in which member-agencies provided a short, eight-question survey to homeowners and
borrowers who closed residential real estate transactions involving federally-related mortgage
loans. The results of the survey were a definitive counter to the suggestion that CBAs and "one-
stop" shops are universally good for consumers. Here are some of the findings:

• Only 11% of respondents were comfortable receiving title insurance from an agency
selected by a bank, real estate firm, mortgage company, etc., when they discovered
that the referral source possessed a financial interest in the title insurance agency.

• 87% of respondents said it was important for their title agent to be a neutral third
party when determining what matters may affect their title.

• Only 5% of respondents prefer a title insurance agent that shares ownership with a
real estate firm, mortgage company, attorney, homebuilder and/or a bank.

• 55% of respondents believe it is a conflict of interest for a real estate firm, mortgage
company and/or a bank to receive a share of profits from selling title insurance or
providing escrow services.
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Letter to Commissioner David H. Stevens
September 1, 2010

• 54% of respondents believe it is a conflict of interest for a real estate firm, mortgage
company and/or a bank to provide incentives or other compensation to their
employees for their referring the real estate transaction to their preferred title agent if
they receive a financial benefit from the referral.

The survey is currently in a second phase of data collection with completion of the second phase
scheduled for December, 2010. There were nearly three hundred responses to the first phase and
an equal amount projected to be received prior to the deadline. OAITA is unaware of any other
data that is being collected by land title associations on the direct subject at issue in this ANPR.
Thus, OAITA is likely the only title organization currently surveying the general public for
responses to the issues present in the ANPR. The first phase of data paints a stark contrast to the
data compiled in the NAR-funded studies of 2002 and 2008. To the extent that the data confirms
that consumers see no benefit to "one-stop" shops, the OAITA survey and the NAR-sponsored
survey are alike.

III. The "Required Use" Definition:

The purpose of the ANPR is to "strengthen and clarify" the regulatory definition of "required
use" in RESPA section 8. However, fixing the present definition is akin to repairing a leaky
faucet with a depressed finger. The fix does not provide a permanent cure to the problem and
can only be seen as a temporary solution. The real estate settlement industries dependent upon
HUD for guidance, oversight and support require meaningful and consistent enforcement.

"Required use" is currently defined in RESPA to mean:

"A situation in which a person must use a particular provider of a settlement


service in order to have access to some distinct service or property, and the person
will pay for the settlement service of the particular provider or will pay a charge
attributable, in whole or in part, to the settlement service." 15

On its face, the "required use" definition suggests that there are situations where a homeowner or
borrower is "forced" to use a particular service provider in order to receive some other benefit or
service connected with the service. For instance, a homeowner may be "required" to use a
bank's controlled title insurance company in order to receive a mortgage loan from that
institution or discounts offered in connection with that bank's loan — thought to be a clear
RESPA violation. HUD's ANPR, suggesting a preference to study the impacts as they pertain to
homebuilder discounts and forward commitments only, would apply equally to any referral
source-controlled title insurance agency since the same tactics are used by those parties to steer
homeowners and borrowers to a referral source's controlled entities.

The "required use" definition currently spelled out by RESPA continues:

"However, the offering of a package or (combination of settlement services) or


the offering of discounts or rebates to consumers for the purchase of multiple

15 Fed. Reg. 31336, Vol. 75, No. 106, Thursday, June 3, 2010.
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Letter to Commissioner David H. Stevens
September 1, 2010

settlement services does not constitute a required use. Any package or discount
must be optional to the purchaser. The discount must be a true discount below the
prices that are otherwise generally available, and must not be made up by higher
costs elsewhere in the settlement process."16

The current definition suggests that discounts may be "offered" so long as they are: (1) optional;
and (2) not "bait-and-switch" type discounts. The definition permits choice. In reality, referral
sources provide these types of discounts in such a way that the homeowners and borrowers often
times feel "strong-armed" and lack adequate sophistication to compare the value of the discount
versus the true cost of the service. In other words, discounts give consumers the choice between
"apples" and "oranges." The net result is more confusion, not less.

The main reason for this confusion is the fact that title insurance and other independent real
estate settlement services are often times marketed to homeowners and borrowers by persons
other than the party providing the service. In essence, this is the failure of a reverse competition
system. It allows the party who receives the kickback the ability to market the product to the
homeowner or borrower. Not only is the reverse competition system irreparably confusing to the
homeowner or borrower, it is also founded in conflict which makes the net result of the
relationship problematic for the ultimate consumers — who are never presented with the option to
waive the conflict -- and those involved in the arrangement — who must part with half of their
profits in order to maintain the referral source's business.
Thus, changing the definition of "required use" without addressing the bargaining and marketing
inequities that exist in the construction of CBAs and the reverse competition system that has
choked off the title insurance industry is not likely to change the problem.

IV. The ANPR's Six Questions: Viewing a Problem Through a Pigeon-Hole

In the ANPR, HUD seeks answers and information to six specific question areas as follows:

1. Can tailoring "required use" to reach abusive incentive schemes, but not
beneficial discounts or packages work?

2. What about forward loan commitments?

3. Other issues on homebuilder "required use"?

4. What has been the state and local regulatory experience on "required use" issues?

5. How will the proposed rule impact "one-stop" shopping?

16 24 CFR 3500.2
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Letter to Commissioner David H. Stevens
September 1, 2010

6. What is the relationship between incentives to use an affiliated settlement service


provider versus disincentives or penalties to do the same?

OAITA has previously stated that the focus of the ANPR is too narrow to address the plethora of
problems caused by CBAs, referral source infiltration into the title insurance industry and the
growth of "one-stop" shops. In order to reexamine the big picture, it would be necessary to
remove the pigeon-hole analysis that has been used and look at the entire settlement service
industry as a whole. To do so would be to embark on the sort of comprehensive analysis that is
required to return the real estate settlement industry to the place it held prior to the subprime
buildup of the late 1990's, the subsequent mortgage meltdown and the Great Recession of 2008.
The simplest way to achieve this goal is to permanently prohibit CBAs and recognize what
organizations like the American Land Title Association® believed thirty years ago when it said
the following:

"[C]ontrolled business arrangements are as harmful as the payment of outright


kickbacks prohibited by Congress under Section 8 of RESPA. The American
Land Title Association® clearly and unequivocally oppose[s] controlled business
arrangements, and HUD should issue regulations to eliminate the problem."

The current scheme of regulation takes up the impossible task of permitting some kickbacks
versus others and puts regulators in the difficult position of continually providing policy
guidance as kickback schemes continuously evolve. Prohibiting CBAs outright eliminates this
problem. If a settlement service provider is prohibited from providing kickbacks in exchange for
settlement service business, any discount it provides would be tied to its product or service, not
its referral source. Regulators could easily track payments made to referral sources the way the
law was originally intended instead of having to differentiate between legal and illegal kickbacks
in the endless search to find what is and is not prohibited.

OAITA's position on each of the questions posed is as follows:

1. Can tailoring "required use" to reach abusive incentive schemes, but not
beneficial discounts or packages work?

Simply put, the answer is no. Any discount provided to a consumer through a conflicted
business relationship always places the consumer in an inequitable bargaining position. Thus,
the only real way to provide benefit to the consumer is to remove the conflict and allow choice
and competition to drive the transaction. Again, this is the main problem with HUD's attempt to
rewrite "required use" and other RESPA-related provisions regarding CBAs. Once you start
differentiating between legal and illegal kickbacks, there is no end to the variable and no true
benefit to the consumer.

2. What about forward loan commitments?

Forward loan commitments are often utilized by homebuilder-owned mortgage companies in


order to provide aggregate levels of home financing for homebuyers who purchase homes from
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Letter to Commissioner David H, Stevens
September 1, 2010

these builders. In theory, forward loan commitments are a means to an end. They provide
available financing in what has been, at times, a narrow field.

However, in practice, forward loan commitments are often used as the pretext to steer
homebuyers into the builders' closely held affiliates and are a prime example of the false
panacea of one-stop shopping. Terms, rates and the true value of discounts provided as part of
the loan commitments are often obscured from the consumer. In many cases, homebuilders
make the broad assertion that unless you use their mortgage affiliate through the commitment,
you cannot close on the home. Giving forward loan commitments special treatment provides a
carrot without proof of a real benefit.

Through the process of the Great Recession of 2008, the idea of free-flowing credit has been
shown to have its limitations. Creating another preference for a closed-market system, such as
that present with forward loan commitments, would only promote the same errors that helped
make too much credit available to too many consumers. Where the provider of the credit has a
stake in each phase of the settlement process, fraud and overreaching are always going to be an
issue. Current disclosures do little to resolve this issue.

3. Other issues on homebuilder "required use"?

Under subsection (f) of the ANPR, HUD asks whether there is data on the extent to which the
current affiliated business disclosure encourages consumers to comparison shop with
nonaffiliated service providers before signing contracts and whether the disclosure can be
improved to inform consumers of the advantages and disadvantages of affiliated lending
practices. This question is asked in such a way as to assume that the disclosure is first adequate
and second that it can be improved. OAITA does not believe the CBA disclosure is adequate
and that improvement can only be gained through revisiting the CBA question in total. Short of
that, a disclosure should be abandoned in favor of the traditional waiver of conflicts of interest as
apparent in the legal profession.

The principles of loyalty and independent judgment are fundamental to the attorney-client
relationship and mirror the conflict of interest issues present in the real estate settlement arena.
HUD should adopt a process to inform consumers of conflicts of interest similar to that present
with attorneys and their clients. Instead of merely disclosing CBAs, HUD should opt to require
CBAs to opt out of representing consumers if there is a substantial risk that the referral source's
ability to consider, recommend or carry out an appropriate course of action for that consumer
will be materially limited by the referral source's , responsibilities to other consumers and the
transaction. HUD should also create a conflict waiver that provides consumers with information
detailing the known risks of using CBAs and allows each affected consumer to give informed
consent confirmed in writing to proceed with a particular CBA.

4. What has been the state and local regulatory experience on "required use" issues?

This question is posed directly to administrative and law enforcement officials. It has been the
experience of OAITA that state regulators and law enforcement officials lack clarity and
knowledge of the conduct of real estate settlement procedures. Thus, whether on "required use"
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Letter to Commissioner David H. Stevens
September 1, 2010

issues or other enforcement issues the GAO opinion that more needs to be done is likely the
answer.

5. How will the proposed rule impact "one-stop" shopping?

This correspondence outlines OAITA' s direct response to this question within the ANPR. There
is no reliable data with the exception of that prepared by our organization on the subject of "one-
stop" shops. To say that "one-stop" shops provide any benefit to consumers is to assume
something that lacks proof. When consumers are informed about the risks of "one-stop" shops
and the apparent conflicts of interest present in these business entities, the majority of consumers
have indicated a preference to avoid them. Since current HUD disclosures merely disclose the
CBA relationship and do not allow for informed consent to the potential harms of said business
entities, it is impossible to truly gauge whether consumers have been impacted by "one stop"
shops. The proposed rule change does nothing to alter this analysis.

6. What is the relationship between incentives to use an affiliated settlement service


provider versus disincentives or penalties to do the same?

In the ANPR, HUD seeks information concerning cases where an incentive to use a certain
provider would not have the same effect as a disincentive for failure to use another provider.
Incentives to use an affiliated provider are no different than disincentives for failing to use an
affiliated provider. The question itself illustrates the confusing nature of trying to distinguish
between legal and illegal kickbacks in the real estate settlement industry. Incentives to use an
affiliated settlement service provider without an opt-out or informed consent waiver merely
sugarcoats the reality that most consumers are typically steered to their settlement provider by
someone other than the provider themselves. To incentivize this conduct is to compound the
conflict of interest. To patronize or sanction this conduct is even worse.

When a provider punishes a consumer for failing to use their affiliated partner, the provider
punishes the consumer for failing to participate in the kickback scheme. Incentives to participate
in the same arrangement are no better. Again, a lack of informed consent concerning the conflict
of interest that exists between providers in a CBA will not abate unless comprehensive change
occurs within the system.

Subtle changes to the "required use" definition to single out homebuilder conduct to the
exclusion of that conducted by banks, mortgage companies and real estate firms is too arbitrary
to be meaningful. OAITA supports comprehensive change.
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Letter to Commissioner David H. Stevens
September 1, 2010

If you have any questions concerning our comments or suggestions and the underlying data
supporting them, please feel free to contact me. I look forward to working with HUD as it
develops this important step in helping to repair the real estate settlement industry.

Yours truly,

Douglas A. King, Esq.


President
Ohio Association of Independent Title Agents
www.oaita.org

DAIC/rbh

Cc: OAITA Board


OAITA Members