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OGC-96-22 1 (1996-06-28)

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GAO            United States
               General Accounting Office
               Washington, D.C. 20548

               Office of the General Counsel



               B-272303.1


               June 28, 1996

               The Honorable Alfonse M. D'Amato
               Chairman
               The Honorable Paul S. Sarbanes
               Ranking Minority Member
               Committee on Banking, Housing, and Urban Affairs
               United States Senate

               The Honorable James A. Leach
               Chairman
               The Honorable Henry B. Gonzalez
               Ranking Minority Member
               Committee on Banking and Financial Services
               House of Representatives

               Subject: Amendments to Regulation X, the Real Estate Settlement Procedures Act:
                         Withdrawal of Employer/Employee and Computer Loan Origination
                         Systems Exemptions (FR-3638); and Policy Statements 1996-1 (regarding
                         computer loan origination systems); 1996-2 (regarding sham controlled
                         business arrangements); and 1996-3 (rental of office space, lock-outs, and
                         retaliation)

               Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on
               a major rule promulgated by the Department of Housing and Urban Development
               (HUD) entitled Amendments to Regulation X, the Real Estate Settlement
               Procedures Act: Withdrawal of Employer/Employee and Computer Loan Origination
               Systems Exemptions (FR-3638); and Policy Statements 1996-1 (regarding computer
               loan origination systems); 1996-2 (regarding sham controlled business
               arrangements); and 1996-3 (rental of office space, lock-outs, and retaliation)
               (RIN: 2502-AG26). We received the rule on June 14, 1996. It was published in the
               Federal Register as a final rule on June 7, 1996. 61 Fed. Reg. 29238.

               The final rule revises Regulation X, which implements the Real Estate Settlement
               Procedures Act of 1974 (RESPA). RESPA generally prohibits compensated referrals
               in connection with real estate settlements involving federally related mortgage
               loans. 12 U.S.C. § 2607(a). However, it also authorizes HUD to exempt payments


GAO/OGC-96-22

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