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Public Statements

RESPA Home Warranty Clarification Act of 2011

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield myself such time as I may consume.

I rise today to encourage all of my colleagues to vote in favor of H.R. 2446, the RESPA Home Warranty Clarification Act.

Before I explain exactly why this legislation is so important and vital, let me first take a moment to thank my friend and colleague, and my fellow Financial Services Committee member and the sponsor of this legislation, Mrs. Biggert, for her hard work on this bill. The fact that this bill passed both subcommittee and full committee by voice vote is a testament to not only the issue's importance, but also to Mrs. Biggert's dedication and openness in alleviating Members' concerns.

Regarding the bill, itself, Mr. Speaker, this legislation will help small businesses. It will help real estate professionals. Most importantly, it will help homeowners by clarifying the law on the sale of home warranties.

Congress enacted legislation many years ago to outlaw kickbacks paid in connection with services that must be performed to close a federally-related mortgage loan. An interpretive rule released by the Department of Housing and Urban Development has, unfortunately, created uncertainty about application of the law to home warranties which are not necessary to close a loan to purchase a home. To eliminate confusion and reduce uncertainty, our bill makes clear that the term ``settlement services'' does not include home warranties.

This legislation also provides new notice requirements applicable to home service contract companies and to real estate professionals so that prospective purchasers of home warranties are aware that a payment may have been made in connection with the selling, advertising, marketing, processing, or performing an inspection in connection with the home warranty.

This simple clarification will allow members of the home warranty industry to pay modest sums to real estate professionals for direct marketing and related services in connection with the sale of a home warranty without a risk of running afoul of a law Congress never intended to be applicable for a completely optional product.

This is the simplification of this law that is very important. It's very simple, but it's very important so that our real estate industry and home mortgage industry can move more smoothly.

Please join me in voting for this commonsense legislation that will benefit consumers and the small businesses that repair and replace home systems covered by home warranties.

With that, Mr. Speaker, I reserve the balance of my time.

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Mr. DAVID SCOTT of Georgia. Likewise, I'm ready to close.

I just want to say in closing that, again, Mrs. Biggert has done a wonderful job on this, Mr. Speaker, and should be commended for it. This is a very important and simple piece of legislation, but it will help to iron out and smooth out confusion and allow for our real estate and our housing and our home mortgage industry to move more smoothly. I urge all of my colleagues to vote for it.

With that, I yield back the balance of my time.

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