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Cityscape: Volume 11 Number 2 | Chapter 7


Regulatory Innovation and Affordable Housing

Volume 11 Number 2

The Impact of Mortgage Disclosure Reform Under RESPA

Harold Bunce
Alastair McFarlane
William J. Reid
Kurt Usowski


A regulatory impact analysis must accompany every economically significant federal rule or regulation. The Office of Policy Development and Research performs this analysis for all U.S. Department of Housing and Urban Development rules. An impact analysis is a forecast of the annual benefits and costs accruing to all parties, including the taxpayers, from a given regulation. Modeling these benefits and costs involves use of past research findings, application of economic principles, empirical investigation, and professional judgment.

This article reflects the views of the authors and does not necessarily reflect the views of the U.S. Department of Housing and Urban Development.


It is expected that the final Real Estate Settlement Procedures Act rule will encourage shopping, increase efficiency, lower housing costs, and promote the purchase of loans that are more suited to a household’s needs. The transfer of markups from firms charging excessive fees to consumers has been estimated to be approximately $670 per loan (a total of $8.35 billion) but could be as high as $1,200 per loan. This transfer of economic surplus will not occur without some costs to industry. We estimate a potential $571 million of one-time adjustment costs. Although it is imaginable that the annual compliance costs of the rule are close to zero, the U.S. Department of Housing and Urban Development has assumed significant costs, ranging from $50 to $74 per loan.


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