The National Association of Mortgage Brokers (NAMB) filed a lawsuit against the United States Department of Housing and Urban Development (HUD) last week. The lawsuit seeks to prevent to HUD from implementing the the new RESPA rule. While NAMB is the first trade association sue HUD, most real estate industry observers expect that dozens of other various local and national trade associations will file suit as well to stop this rule from going into effect.
NAMB believes that the new RESPA rule violates the Administrative Procedure Act (APA) and the Regulatory Flexibility Act (RFA). The lawsuit also alleges that HUD failed to examine the new rules impact on small businesses arguing that the implementation of this rule will significantly hurt consumers and cause unfair imbalances in the mortgage lending marketplace.
If the Obama Administration doesn’t kill the new RESPA rule in its entirety next month when they take office then the odds are this will hot button rule will be mired in litigation and cost millions of dollars in legal fees on both sides.