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Special Bulletin - February 2004 Shareholder’s Update

Henry L. Shulruff, Senior Vice Peter J. Birnbaum, President President – Business Development

RESPA REGULATIONS On December 16, 2003, while Congress was in recess, HUD submitted a final Real Estate Settlement Procedures Act (RESPA) rule to the White House Office of Management and Budget (OMB). Many of us were surprised that HUD would proceed with a final rule given the widespread opposition to these regulations by industry groups, consumer groups, and members of Congress. We do not know the contents of the final rule. And, both the White House and The Honorable ______HUD are prohibited from disclosing Dear Congressman ______: its contents until OMB makes a I am deeply concerned about the proposed revisions to the RESPA regulations that HUD has recommendation on its implementation. delivered to the OMB. While we have not seen the final rule, we have seen a proposed rule. If the However, we believe the rule likely rule is similar, Congress should be alarmed. contains provisions that will negatively When Congress enacted RESPA in 1974, it sought to lower housing acquisition costs by eliminating impact small businesses, in particular, kickbacks in the real estate industry and to give consumers the opportunity to shop for the best products and services. The avowed goal of Congress was to make the transaction transparent to small title agents. Congressman Don the consumer by requiring full disclosure of all costs associated with the purchase or sale of a Manzullo (R-Illinois), Chairman of the home. Now, by regulation, the department would overturn this important cornerstone of consumer Small Business Committee, has already protection in the U.S. housing market. convened an emergency hearing to voice I would like to briefly articulate four concerns about the rule: his objections to HUD’s insistence on First, the rule has the practical effect, whether intended or not, of eliminating competition and moving forward with a final rule that in giving big banks and Realtors a monopoly on the delivery of settlement services required to close residential mortgage loans. all likelihood will devastate the smaller Second, under the guaranteed packaging proposed by HUD, borrowers would pay a lump sum for title agents. all closing-related fees. There would be no required itemization of charges, services, or providers We urge you to contact your included in the package. This is 180° opposite from the statutory scheme that Congress adopted for RESPA in 1974. We believe consumer understanding of the real estate process should be improved. Congressmen immediately regarding From our perspective, disclosures to consumers should be strengthened and enhanced, not this potentially disastrous rule-making eliminated, which is what this rule does. initiative. Fax your letter or send it via Third, the proposed regulations will raise the buyers’ costs to purchase a home. Not only will the e-mail, then follow-up with a phone buyer have to pay for the cost of the kickbacks that will be paid under this scheme, in seller-pay states, closing and title costs will be shifted to the buyer, resulting in a doubling or tripling of the call to his or her office. At the right is a buyers’ expense. sample letter for your consideration. Fourth, although the proposed rule does not explicitly say so, the only way that HUD’s packaging Please also consider writing directly scheme could be implemented would be to preempt the myriad state laws, regulations, and rulings to the OMB. Direct your letter, by that have been developed to protect consumers. Throughout U.S. history, the regulation of real estate and insurance has been primarily the province of our state governments. Most states have a body of facsimile, to the Honorable Joshua B. law that governs the transfer and/or insuring of real property interests. As we understand the HUD Bolton, Director, Office of Management proposal, state statutes would be preempted in favor of a federal regime. and Budget, (202) 395-3888. Significant changes to RESPA should be accomplished through the legislative process, notby regulation. Housing is a critical sector of our national economy and the foundation of wealth for We will be asking Congress to use its most families. Changes that would significantly affect how residential properties are transferred and powers under the Congressional Review financed warrant careful scrutiny and deliberation. Congress, and not an administrative agency, Act to enjoin the implementation of should decide whether the statutes it has enacted should be substantially revised. these regulations. If those efforts are Allowing these regulations to be implemented will do great harm to the citizens you serve. We believe that if these regulations are implemented, closing costs will skyrocket, housing will become less not successful, we are prepared to sue affordable, and an already complicated process will become even more mystifying to the consumer. HUD. Sincerely, ATG members have always produced ATG Member significant, effective lobbying efforts at the grass roots level and right now it is as important as ever respect to RESPA reform, the real estate settlement process, that you do your part to protect your practice and consumers’ and other issues of concern to lawyers and their clients. To rights to receive independent counsel. Please send your make a donation to ATG Federal PAC, complete the form letters as soon as possible. We have included an updated below and send a check (made payable to ATG Federal PAC) table of contact information for the Illinois Delegation to to: Congress. We also encourage you to visit www.firstgov.gov, ATG Federal PAC, 2408 Windsor Place, P.O. Box 9136, the government’s official web portal, for Champaign, Illinois 61826-9136 additional contact information. Attention: Michael K. Brandt, Treasurer In addition to letter-writing, we appreciate your ongoing Ø Please note that ATG Federal PAC cannot accept financial support. Our August 2003 appeal for ATG’s corporate contributions. If your firm operates as a Federal Political Action Committee was successful thanks to professional corporation, please send a personal the generosity of many ATG members. These funds support or other non-corporate check. Thank you for your candidates whose views are consistent with our own with continued support.

ILLINOIS DELEGATION TO 108TH CONGRESS February 2004 US SENATE ADDRESS PHONE FAX E-MAIL or WEB MAIL www.senate.gov Washington, DC | Zip Codes as shown Area Code 202 Area Code 202 Peter G. Fitzgerald 555 Dirksen Senate Office Bldg. | 20510 224.2854 228.1372 [email protected] Richard J. Durbin 332 Dirksen Senate Office Bldg. | 20510 224.2152 228.0400 http://fitzgerald.senate.gov/contact/contact_email.htm U.S. HOUSE www.house.gov ADDRESS PHONE FAX Washington, DC | Zip Codes as shown Area Code 202 Area Code 202 E-MAIL or WEB MAIL Dist. Name 1 Bobby L. Rush 2416 Rayburn HOB | 20515-1301 225.4372 226.0333 http://www.house.gov/rush/zipauth.html 2 Jesse L. Jackson, Jr. 2419 Rayburn HOB | 20515-1302 225.0773 225.0899 [email protected] 3 William O. Lipinski 2188 Rayburn HOB | 20515-1303 225.5701 225.1012 http://www.house.gov/writerep/ http://luisgutierrez.house.gov/edback.cfm?campaign= 4 Luis V. Gutierrez 2367 Rayburn HOB | 20515-1304 225.8203 225.7810 luisgutierrez&type=Let%27s%20Talk 5 1319 Longworth HOB | 20515-1305 225.4061 225.5603 http://www.house.gov/emanuel/IMA/issue.htm 6 Henry J. Hyde 2110 Rayburn HOB | 20515-1306 225.4561 225.1166 http://www.house.gov/hyde/ContactMe.htm 7 Danny K. Davis 1222 Longworth HOB | 20515-1307 225.5006 225.5641 http://www.house.gov/writerep/ 8 Philip M. Crane 233 Cannon HOB | 20515-1308 225.3711 225.7830 http://www.house.gov/writerep/ 9 Janice Schakowsky 515 Cannon HOB | 20515-1309 225.2111 226.6890 http://www.house.gov/schakowsky/contact.html 10 Mark S. Kirk 1531 Longworth HOB | 20515-1310 225.4835 225.0837 [email protected] 11 1210 Longworth HOB | 20515-1311 225.3635 225.3521 http://www.house.gov/formweller/formweller/ipauth.htm 12 Jerry F. Costello 2454 Rayburn HOB | 20515-1312 225.5661 225.0285 http://www.house.gov/writerep/ 13 Judith Borg Biggert 1213 Longworth HOB | 20515-1313 225.3515 225.9420 http://judybiggert.house.gov/contact.asp 14 J. 235 Cannon HOB | 20515-1314 225.2976 225.0697 [email protected] 15 Timothy V. Johnson 1229 Longworth HOB | 20515-1315 225.2371 226.0791 http://www.house.gov/writerep/ 16 Donald A. Manzullo 2228 Rayburn HOB | 20515-1316 225.5676 225.5284 http://www.house.gov/writerep/ 17 Lane A. Evans 2211 Rayburn HOB | 20515-1317 225.5905 225.5396 [email protected] 18 Ray LaHood 1424 Longworth HOB | 20515-1318 225.6201 225.9249 http://www.house.gov/writerep/ 19 John M. Shimkus 513 Cannon HOB | 20515-1320 225.5271 225.5880 http://www.house.gov/shimkus/emailme.htm

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Attorneys’ Title Guaranty Fund, Inc., Shareholder’s Update – February 2004 Page 2 of 2