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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. HINOJOSA. Mr. Speaker, I rise today in support of H.R. 2446, ``The RESPA Home Warranty Clarification Act.'' The Real Estate Settlement Procedures Act of 1974, or RESPA, was crafted by Congress to only cover those services necessary for closing the transaction of buying a home. A recent interpretive rule issued by the Department of Housing and Urban Development broke this precedent by bringing home warranties under RESPA. This bipartisan act clarifies that home warranties fall outside the scope of RESPA because they are unnecessary for closing.

This bill was passed out of the Financial Services Committee on voice vote, and I am proud that the Committee also passed an amendment that I offered, which adds even more transparency to the bill.

This amended bill would require the real estate broker who recommends the purchase of a home warranty to a homebuyer to disclose that he or she may receive compensation for the recommendation; that the homebuyer is not required to purchase a home warranty contract; and that the homebuyer can purchase a home warranty contract from a provider not recommended by the real estate broker.

This is is essential information for the homebuyer to make an informed choice when deciding whether to purchase a home warranty and I am proud to have added this disclosure requirement to H.R. 2446. This bill makes clear that the term ``settlement service'' in RESPA does not include home warranties, something Congress never intended.

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