The Value of the Sunshine Cure: The Efficacy of the Real Estate Settlement Procedures Act Disclosure Strategy

20 Pages Posted: 5 Feb 2008

See all articles by Mark D. Shroder

Mark D. Shroder

U.S. Department of Housing and Urban Development - Position given for identification purposes only. The Department of HUD is not responsible for any opinions expressed in this publication.

Abstract

This article examines the efficacy of the disclosure strategy of the Real Estate Settlement Procedures Act (RESPA). Four questions are critical in evaluating the efficiency of federally mandated disclosure by itself as a regulatory strategy: whether lending and title fees are large enough to be worth regulating; whether the Good Faith Estimate mandated by RESPA is an unbiased and consistent estimator of lending and title fees; whether state law has a negligible effect on fees (and therefore only national regulation is pertinent to the problem RESPA addresses); and whether RESPA achieves fairness, in the sense that disclosure so strengthens the negotiating position of buyers and sellers relative to service providers that the principals' personal characteristics do not influence the fees they pay. This article presents preliminary tests on these issues from a small and somewhat unrepresentative sample of FHA-insured loans.

Keywords: RESPA, Real Estate Settlement Procedures Act

Suggested Citation

Shroder, Mark D., The Value of the Sunshine Cure: The Efficacy of the Real Estate Settlement Procedures Act Disclosure Strategy. Cityscape, Vol. 9, No. 1, 2007. Available at SSRN: https://ssrn.com/abstract=1089448

Mark D. Shroder (Contact Author)

U.S. Department of Housing and Urban Development - Position given for identification purposes only. The Department of HUD is not responsible for any opinions expressed in this publication. ( email )

451 Seventh Street SW
Washington, DC 20230
United States

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