Amend RESPA to prohibit lending institution descrimination sign now

Petition to amend RESPA section 9

Section 9 of the Real Estate Settlement Procedures Act restricts a seller from requiring the use of a particular title insurance company as a condition of the sale.

We would like to amend that section to include a prohibition of sellers requiring buyers to be pre-approved by a particular lender or lending institution as a condition of the sale, or as a consideration for determining a buyers suitability. "Sellers" to include builders and bank owned homes.

RESPA section 9 currently;
prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.

Due to the fact that the majority of properties on the market are bank owned or require bank approval of short sale, buyers are constantly encountering the requirement that a buyer provide a pre-approval letter from a specific lending institution. Further, we are now seeing a requirement of using a specific lender within a specific lending institution before an offer will be submitted or considered. The seller states that the buyer can use any lender they want, but before they will be considered, they must be approved by the sellers lender of choice, even in the case of a cash buyer with proof of funds. By creating the requirement of using a specific lender or institution prior to submitting a buyers offer, sellers may use this as a technique to discriminate against certain buyers. This also requires a buyer to go through the approval process many more times than necessary, which can be detrimental to their credit score. Additionally, the added time required to meet with and be approved by a particular lender adds un-necessary time to an already lengthy process. With this in mind, the following amendment to RESPA section 9 is requested:

We the undersigned petition the Department of Housing and Urban Development to amend section 9 of the Real Estate Settlement Procedures act to include the following:

Sellers of real property, including new home builders and REO home sellers are prohibited from requiring a lending pre-approval from a specific lending institution or a specific lender as a condition of a sale, or as a condition of consideration for determining a buyers suitability for a sale.

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Lorraine GriffithBy:
Politics and GovernmentIn:
Petition target:
Housing & Urban Development

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