Mr. BACA. Mr. Speaker, I rise in support of H.R. 2446, the RESPA Home Warranty Clarification Act.
This bill clarifies that the sale of home warranties cannot be considered a settlement service, and therefore cannot be governed under the Real Estate Settlement Procedures Act, or RESPA.
Many individuals buying a home want to avoid the financial risk of having to pay for major repairs on major systems and appliances.
To reduce that risk and to get the peace of mind that comes with knowing they can help guard against the cost of significant repairs, home buyers often purchase a home warranty.
Many individuals selling a home find that providing a home warranty at their own cost can help facilitate a quicker sale at a higher price by reducing the risk of the unknown for potential buyers.
It is important to note that the purchase of the product is completely optional, and is not made mandatory by any financial institution or government sponsored enterprise during the home-buying process.
Recently, however, HUD erroneously issued an interpretive rule blocking real estate agents from receiving a modest fee when they recommend the product to their client upon the purchase of their new home.
As such, if this rule is allowed to stand, realtors would have no incentive to inform their clients about this product.
Consequently, first-time homebuyers, or low- and moderate income-families may not be made aware of this option, instead being forced to pay full price for the replacement of their home's most expensive appliances.
At a time when our economy is still struggling, we need to ensure that hard working American families are still allowed to gain access to financial products that they depend on.
That is why I urge my colleagues to support H.R. 2446.