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| ![](media/i          | **ClosingCorp Inc.**                          |
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|                      | **7817 Ivanhoe avenue, suite 302, La Jolla,   |
|                      | CA 92037**                                    |
|                      |                                               |
|                      | 858-551-1500 • 858-551-1550 Fax               |
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May 29, 2008

VIA ELECTRONIC SUBMISSION

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| Regulations Division                                                  |
|                                                                       |
| Office of General Counsel                                             |
|                                                                       |
| U.S. Department of Housing and Urban Development                      |
|                                                                       |
| 451 Seventh Street SW                                                 |
|                                                                       |
| Room 10276                                                            |
|                                                                       |
| Washington, DC 20410                                                  |
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**Re: Real Estate Settlement Procedures Act (RESPA): Proposed Rule to
Simplify and Improve the Process of Obtaining Mortgages and Reduce
Consumer Settlement Costs**

***Docket No. FR-5180-P-01 / 73 Fed. Reg. 14030 (Mar. 14, 2008)***

Dear Sir or Madam:

ClosingCorp, Inc. ("ClosingCorp" or the "Company") thanks you for the
opportunity to provide comments to the above-referenced rule to reform
the Real Estate Settlement Procedures Act ("RESPA"). ClosingCorp is a
Delaware corporation headquartered in San Diego, California that is
developing a network of web sites to serve the needs of consumers and
real estate professionals. ClosingCorp has developed an online service
that allows consumers and professionals to shop and obtain instant
quotes for real estate closing services, often with "e-commerce"
discounts.

Closing.com (the "Site" or "Closing.com"), the Company's principal Site,
will launch during the summer of 2008. Closing.com will be a one-stop
shop where users can learn about settlement services, make inquiries,
and initiate contact with vendors online. The Site's Learning Zone will
provide step-by-step guidance on matters related to real estate
closings. Upon launch, the Company expects the Site to be the Internet's
most comprehensive source for real estate and settlement service
providers and the web's leading destination for information about the
settlement process and shopping for closing services.

In October 2007, in partnership with the California Land Title
Association, ClosingCorp introduced the Title*Wizard*^TM^
(www.CLTA.TitleWizard.com, hereinafter the "Title*Wizard*"), a free,
web-based tool that makes it easy to shop for and compare title
insurance policies and rates within the State of California. Users can
enter information about a real estate property and locate title
companies in their area, compare policy details and get a free quote
based on their particular type of transaction. As a result of the
Title*Wizard*'s launch, the California Department of Insurance postponed
a plan to roll back title insurance rates and has stopped supporting its
own title insurance rate survey. The California Department of Insurance
now refers consumers, through a link on its web site
(www.insurance.ca.gov), to the Title*Wizard*.

Consumers need help before they can effectively shop for title insurance
and other closing services -- often for the first time. ClosingCorp's
business mission is to empower consumers, real estate professionals, and
closing service vendors to conduct business online more economically,
more efficiently, and in a more informed manner. For these reasons, we
applaud the U.S. Department of Housing and Urban Development ("HUD" or
"Department") for its attempt to lower costs for consumers and promote
shopping for settlement services. ClosingCorp, however, is concerned
that HUD's focus on the Good Faith Estimate ("GFE") and the mortgage
lender's disclosure of settlement charges could actually discourage
consumers from shopping for title insurance and closing services. As a
result, the Company urges the Department to consider additional
modifications to the proposed GFE to (i) better emphasize that shopping
for settlement services is in consumers' best interests; and (ii) refer
consumers and professionals to actual websites or other sources of
information that will assist in their evaluation of settlement services
and providers.

Below we further discuss this concern, as well as other comments to the
proposed rule.

**I. CLOSINGCORP'S MAIN CONCERNS WITH THE PROPOSED RULE**

> **A. [The Proposed GFE and Tolerance Limitations Discourage Consumer
> Shopping]{.underline}.**

In 2007, the Government Accountability Office ("GAO") released a report
titled, "Title Insurance: Actions Needed to Improve Oversight of the
Title Industry and Better Protect Consumers."[^1] In the report, the GAO
focused squarely on the link between consumer shopping for title
insurance and the cost for such services and determined that consumers
find it difficult to shop for title insurance. Of the two actions the
GAO recommended HUD undertake to improve the functioning of the title
insurance market, the first was to "improve consumers' ability to shop
for title insurance based on price."[^2] In light of these findings, we
commend HUD for its focus on improving RESPA disclosures to encourage
consumers to shop for lower-priced settlement services. However,
ClosingCorp is concerned that the rule does not go far enough to meet
these objectives. In fact, we believe the proposed GFE and tolerance
limitations may actually discourage consumers from shopping for
settlement services and limit competition among settlement service
providers.

Specifically, in connection with the Department's proposal for a new
GFE, HUD proposes to subject the fees for third-party settlement
services (when these services are obtained from lender-recommended
providers) to a 10% tolerance. Thus, if the sum of the costs for the
third-parties' services increases by more than 10% between the time of
the GFE and the closing, the rule would deem the lender to be in
violation of RESPA's regulations. By contrast, if a borrower shops for
and selects his own third-party service providers, the rule would not
restrict the amount the fees may increase at closing. Under these
circumstances, we believe the rule forces mortgage lenders to establish
relationships with third-party settlement service providers in an
attempt to control the costs charged by these providers and avoid
exceeding the applicable tolerances and potential penalties. In other
words, if a lender can create a team of preferred settlement service
providers, it can guarantee to its customers that the price of the
preferred vendors' settlement services will never increase by more than
10% at closing. If, however, a borrower elects to shop for his own
settlement service providers, the borrower may be faced with
unrestricted increases in settlement fees. It should be no surprise that
a borrower, when faced with these two options, will decline to shop for
his own settlement service providers and select the vendors recommended
by the lender.

Under these circumstances, ClosingCorp believes the Department's focus
on the imposition of tolerances as a means to limit a consumer's costs
is misplaced. To maintain a freely competitive market [and]{.underline}
lower a consumer's settlement costs, HUD should refocus the proposed GFE
to affirmatively encourage consumers to shop for settlement services. As
the proposed GFE currently reads, it is not entirely clear that a
consumer may shop for title insurance and closing services. In fact,
page three of the GFE seems to discourage shopping by stating that
"charges can change if you select your own provider and do not use the
companies your lender suggests." Rather than frightening consumers into
selecting the lender's recommended providers as the only way to control
costs, the Company urges the Department to better instruct consumers
that comparison shopping is an effective (and empowering) way to lower
their settlement costs, including costs for title insurance and closing
services.

First, ClosingCorp asks HUD to revise the GFE to better explain those
services for which consumers are free to shop. With regard to title
insurance and closing fees, HUD proposes to disclose the fees under
items four and ten on page two of the GFE, rather than as fees for
"required services that you can shop for" in item five. In order to
understand that a consumer is free to shop for such services, a consumer
would have to read page three of the GFE in detail and infer from the
explanation of tolerances that he may select his own title insurance
provider. If the point of the revised disclosure is to simplify the GFE
and provide consumer clarity, this disclosure of title insurance and
closing fees is insufficient. Unless the Department is willing to
abandon its tolerance limitations, we recommend that HUD revise the GFE
to affirmatively state that consumers may shop for settlement services,
identify those specific services for which consumers may shop, such as
title insurance and closing services, and more clearly explain the
benefits and drawbacks of selecting the lender's recommended providers
([i.e.]{.underline} settlement costs may increase by no more than 10%,
but the consumer could shop for lower prices). Even with no tolerance
limitations, the Company believes a statement in the GFE to encourage
consumers to shop for settlement services is the best way to ensure that
vendors actively compete for potential customers, which will lower
settlement costs in the end. HUD could draw from its existing sample
affiliated business disclosure, which includes the language: "You are
free to shop around to determine that you are receiving the best
services and the best rate for these services."[^3]

Second, to facilitate a consumer's understanding of closing services and
the settlement process and their ability to shop for title insurance and
closing services, ClosingCorp asks the Department to revise its
Instructions section of the proposed GFE to include direct references to
internet sites, such as Closing.com and other web sites that provide
information, quotes, and the ability to make inquiries or initiate
contact with closing service vendors. As the GAO's findings demonstrate,
consumers historically have not shopped for title insurance and closing
services. As a result, we believe it is not enough to affirmatively
instruct consumers to comparison shop for these services. HUD should
take the next step and direct consumers to the resources that will
assist them in comparing prices for title insurance and closing services
and initiating a transaction, if desirable.

If HUD is reluctant to make direct "consumer-help" references on the
face of the new GFE, we ask the Department to follow the lead of the
California Department of Insurance and create a website devoted to
reference materials and direct links to, among others, Closing.com. The
new GFE could then direct consumers and professionals to the HUD website
containing references and links to sites providing similar types of
consumer assistance. As these sites compare the prices for large and
small closing providers, as well as information about the providers
themselves, consumers will have virtually instant access to a
competitive marketplace of settlement service information. HUD also is
able to encourage a competitive marketplace that will not disadvantage
small title and closing service providers. As noted above, this
competition will promote lower settlement service prices, which achieves
the Department's objectives for the proposed rule.

> **B. [HUD Should Reconsider Certain Title Insurance
> Disclosures]{.underline}.**

To further enhance a consumer's ability to shop for title insurance and
closing services, the GFE and HUD-1 disclosures should provide the
consumer with as much information as is reasonable to understand the
individual services and associated costs that comprise title insurance
and closing services. The rule, however, proposes to simplify the GFE
and HUD-1 by consolidating certain title insurance disclosures. For
instance, rather than itemize each title-related fee, the rule proposes
to require only a single fee for "primary title services" to be
disclosed to the consumer. The Company is concerned that these modified
disclosures will further discourage consumers from shopping for title
insurance and closing services.

> **1. "Primary Title Services"**

In a departure from current requirements regarding the itemization of
settlement charges on the HUD-1, HUD now intends to require that a
single fee be disclosed for "primary title services." We object to this
proposed change. More than one provider typically performs the services
the rule would bundle into a single charge, which means that different
providers often charge different prices for their services. Consumers
will never see these differences with a single consolidated fee or be
made aware of those title-related services for which the consumer can
comparison shop. Without knowing the individual charges, how can a
consumer effectively shop for these same services or compare prices?
HUD's proposal conflicts with the rule's objective to promote consumer
shopping. ClosingCorp, therefore, asks the Department to continue to
require the itemization of title insurance and closing fees. We believe
that a listing of fees for individual title services provides the
consumer with the most information possible to shop for the lowest title
insurance and closing prices.

> **2. "Optional" Owner's Title Insurance**

Moreover, although the Department has proposed a single fee for "primary
title services," the rule proposes to separately disclose the fee for
"optional owner's title insurance." While it is true in many states that
a borrower is not required to purchase owner's title insurance coverage,
a consumer should not be discouraged from seeking title insurance
coverage to protect their own interests. By including the term
"optional" in the separate line item for owner's title insurance, the
Company believes this could be viewed as a suggestion on HUD's part that
a consumer does not need separate coverage for title insurance. This
also ignores the fact that an owner's title policy is usually cheaper if
it is purchased at the same time as the lender's policy, and it directly
conflicts with certain states' mandate for the purchase of owner's title
insurance in every residential real estate transaction. Thus, while
ClosingCorp agrees with the separate disclosure for owner's title
insurance, we ask the Department to remove the word "optional" from the
GFE and HUD-1 disclosure. We believe the Department should refrain from
using any language that will discourage a consumer's pursuit of
beneficial settlement services.

> **C. [HUD's Definition of "Required Use" Highlights the Need for
> Efficient Consumer Comparison Shopping]{.underline}.**

Based on RESPA's current definition of "required use," ClosingCorp
understands that a settlement service provider may offer any incentive
to encourage a customer's use of affiliate or preferred providers, as
long as any discount is a true discount and is not made up elsewhere in
the cost of the transaction. Under the proposed definition, however, it
appears that a settlement service provider may only discount the cost of
the affiliate or preferred provider's services. In other words, if, for
example, a real estate agent refers its customers to a preferred title
company and offers a discounted closing fee for use of the title
company's closing services, this discount must be cheaper than the title
company's typical closing fee. If this is the Department's intent with
the revised definition, the Company supports such an approach, as it
highlights the need for greater efficiency in consumer shopping for
settlement services.

Notably, both the Company's Closing.com and Title*Wizard* products allow
a consumer to shop among title insurance and closing providers and
compare prices for various title-related services. In those
circumstances where a settlement service provider must offer a consumer
a discount on an affiliate's closing services to avoid the prohibition
on required use, a consumer could access one of these online products to
determine whether the discounted price is a good deal. Otherwise, the
consumer has no basis to know whether the offered price is really a
discount or whether other title insurance and closing companies could
beat the discounted price. As a result, we believe the proposed
revisions to the definition of "required use" open the door for more
consumer shopping and lower prices, which supports HUD's overall
objectives. Consumers need the tools to efficiently comparison shop, and
we ask the Department to back up its revised definition with the
resources to ensure settlement service providers comply with the rule
when recommending their affiliates and consumers actually receive lower
settlement service prices. Again, the Department can go a long way
toward providing the public with this help by adding direct references
to settlement services shopping and comparison sites, such as
Closing.com, on its GFE or by creating a webpage with links and
references to such sites or resources.

**II. CONCLUSION**

ClosingCorp appreciates HUD's consideration of these comments, and we
respectfully request that the Department carefully consider the ways in
which the proposed rule may inadvertently discourage consumers from
shopping for settlement services. As the GAO title insurance report
confirms, for too long consumers have failed to shop for title insurance
and closing services and, instead, selected the providers recommended or
mandated to them by other settlement service providers. As a result, HUD
has the opportunity with this rule to create a competitive marketplace
by encouraging consumers to actively comparison shop for title and
closing services. The Company, however, is concerned that the
Department's proposals for the GFE, including the tolerance limitations,
will continue to favor a system of lender-selected settlement service
providers and result in little consumer comparison shopping. We,
therefore, believe that HUD will best serve the interests of consumers,
as well as the competitive marketplace of settlement service providers,
by actively instructing consumers to shop for title insurance and
closing services. By fostering increased competition, the Department
will be sure to meet its goal of lowering settlement costs for
consumers.

To facilitate consumer shopping, we also ask the Department to
reconsider certain title-related disclosures relating to owner's title
insurance and the bundling of title insurance fees. We believe that the
Department must make the settlement process as easy as possible for the
consumer to understand, including the services required to close a loan
and the ability to shop for lower prices. This can only be accomplished
with itemized fees.

Moreover, we commend HUD for its revisions to the definition of required
use. Like the Department's proposed revisions to the GFE, ClosingCorp
sees this as an opportunity to enhance a consumer's ability to compare
prices and shop among settlement service providers. Closing.com is
designed with these goals in mind and will allow HUD to give consumers
the resources to effectively shop for title insurance and closing
services. We ask the Department to consider how it and similar products
will assist HUD in meetings its objectives for the proposed rule.

> If we can provide any further information or clarify the views
> expressed herein, please do not hesitate to contact us. Sincerely,

/ s / *Paul J. Mass* / s / *Anthony T. Farwell*

Paul J. Mass Anthony T. Farwell

Director & General Counsel Director and Chief Executive Officer

[^1]: [See]{.underline} Title Insurance: Actions Needed to Improve
    Oversight of the Title Industry and Better Protect Consumers,
    [available]{.underline} [at]{.underline}
    http://www.gao.gov/cgi-bin/getrpt?GAO-07-401.

[^2]: [Id.]{.underline} at p. 6.

[^3]: 24 C.F.R. Part 3500, App. C.