Congressman Ehrlich: RESPA Warrior

Mortgage Banking, November 1998 | Go to article overview
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Congressman Ehrlich: RESPA Warrior

Congressman Robert L. Ehrlich Jr. (R-Maryland) has played a lead role in trying to win some relief for the industry froth the ongoing threat of class-action suits under the Real Estate Settlement Procedures Act (RESPA). The Baltimore native, an attorney, has served in the House since January 4, 1995. Rep. Ehrlich serves on the Committee on Banking and Financial Services, the Committee on the Budget and the Committee on Government Reform and Oversight.

We reached him at his Capitol Hill office shortly alter he had succeeded in getting some pivotal language on RESPA inserted in the HUD, VA and independent agencies appropriations conference report. Here is what he had to say about the damage being done by the ongoing uncertainty about RESPA, and what he's trying to do to fix it.

Q: What is the status of H. R. 1283, the RESPA Class Action Relief Act, and what prompted you initially to get involved with that legislation?

A: Let me take the second part first. I championed a number of tort-reform initiatives in the state legislatures during my years on the House Judiciary Committee in the Maryland General Assembly. So I was known as a tort reformer as I came to Congress in 1995. I was also known as someone who was very close to the interests of small business. Small-business people had formed my core constituency in all my races, particularly my first race in Congress. We were then approached by a number of mortgage brokers with respect to this issue.

I should also add, my professional career was as an attorney representing small businesses in litigation.

When you combine all those factors - my career; my philosophical predisposition; the need; and a guy named John Councilman, a now famous mortgage broker constituent from Baltimore, who brought this issue to my attention - the bill grew out of all those factors. So I was the logical person to take the lead on this issue.

Q: Who have you converted to the cause?

A: Well, we're in the process of converting the world. J.P. [Scholtes] of my staff has done a lot of the grunt work on this bill, securing the co-sponsorships. I guess the way to answer your question is, if you look at the cosponsorships, we started from ground zero. We are now up to 133 cosponsors, which is terrific.

Now, what you may not know, however, is that we have already achieved today - actually, about two hours ago - significant success. We [had] language placed in the FY '99 VA HUD appropriations bill on this issue [see box for full text of language]. Basically what it directs HUD to do is come out with a rule within 90 days that these fees are legal. The bottom line to this issue in the short term is this language. All we've been asking for from day one is for HUD to promulgate a regulation that makes sense.

Q: And what has been the problem preventing HUD from doing that?

A: Well, I could answer that any number of ways, but it's HUD. For some reason HUD, when they came out with their interim rule, which was a mess, that generated over 9,000 individual responses from folks in the business across the country. They seemed to be in a quandary as to what to do. I don't know what forces are at work other than - the only force I care about is we have legitimate businesspeople out there now facing class actions, facing the prospect of having their businesses shut down for no good reasons. There are legitimate lawsuits out there. I represented plaintiffs once in a while, and there are legitimate causes of action. This, however, is not one.

RESPA is a statute in need of a fix. The anti-kickback provision most particularly is in need of a fix. The fact of these lawsuits is quite unfortunate for legitimate, honest businesspeople, and HUD should not be in business to feed a narrow class of plaintiffs' attorneys' ability to send their kids to college on filing class actions.

Q: So what is the status of your bill?

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