**JOSEPH A. LA ZARA & ASSOCIATES**

**[A PROFESSIONAL CORPORATION 7246 West Touhy Avenue, Chicago, IL
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**Michael A. Manges** **Send All Correspondence to Touhy Avenue Office**

June 2, 2008

Department of Housing and Urban Development

Sent Via RESPA Website Under Comments Section

**RE: HUD Proposed Rule to Simplify and Improve the Process of Obtaining
Mortgages and Reduce Settlement Costs**

Dear Senator Obama:

I am writing you to express my concern about a HUD proposed rule that,
if implemented, will have a devastating impact on small law firms and
the consumers we represent.

The proposed rule is entitled "Proposed Rule to Simplify and Improve the
Process of Obtaining Mortgages and Reduce Settlement Costs." It was
published by HUD in the Federal Register on March 14, 2008.

The proposed rule will neither simplify the process of obtaining
mortgages nor will it reduce settlement costs for consumers. In fact, if
enacted, I believe that consumers will pay higher prices for settlement
services and possibly lose the right to independent legal representation
in what is, for most, the largest financial transaction of their lives.

The proposed rule gives lenders almost total control over the selection
of the title company and other closing services. We believe that the
mortgage banks, as they have in the past, will use this regulatory
loophole to enable them to sell company-owned or bank-controlled
products directly to the consumer. Under the guise of these regulations,
the bank-owned title companies will stifle competition and, as a result,
the consumer will loose the ability to shop for competitive services and
will pay higher prices. This is exactly the kind of harm Congress sought
to prohibit when it enacted RESPA in 1974.

In addition, the regulations provide for the title company closing agent
(closer) to read a script at closing where the closer would do a
detailed analysis of the transaction comparing the Good Faith Estimate
tendered to the consumer at the time of the application with the HUD-1
presented at closing. Keep in mind that the closer would be an employee
or agent of the bank-owned or bank-controlled title company. Not only
does this not make regulatory sense, in Illinois, **this is the practice
of law.** I find it incomprehensible that the Federal Government would
establish a regulatory protocol where lawyers who are trained in these
matters will be displaced by non-lawyers who have a conflict of interest
and are inexperienced in the process.

Many Americans, including myself, are concerned about the economic
uncertainty we are facing. The \$4.00 per gallon gas, the rising cost of
living, the soaring cost of food, etc.; the list is overwhelming. I
believe, along with many experts, that this economic crisis is directly
attributable to the loose standards lenders used to approve loans from
approximately 2002 through 2006. In those years, many lenders were
willing to loan money to just about anyone with a pulse because they
were selling the loans to investors at great profit, not holding onto
them. So, normal standards for making loans were ignored in too many
cases.

The mortgage lenders and brokers, banks, Wall Street investment banks
and bond investors were all looking to maximize profits, with little
regard to sound lending practices. Due to lax oversight and greed in the
mortgage market, mortgage originators, who gave the money out, were able
to lend money to consumers who put no money down or who provided no
proof of income. They also pushed marginal borrowers into more expensive
\"sub-prime\" loans at higher-than-prime interest rates which generated
more profits for mortgage lenders. The originators, lenders and brokers,
were able to do this because they figured if the borrower defaulted,
they would just repossess the house and sell it for a profit in the
red-hot housing market. Or, the originators didn\'t worry because they
figured they would bundle the loan with dozens of others and sell the
package to investors, who then were on the hook for any risk of default.
Either way, they made the fee for originating the loan.

The whole financial arrangement collapsed when investors who bought
these pools of loans forced some mortgage originators to take them back.
It did not take long for the originators to go bankrupt. But it also
turns out that many large banks, investment banks, and other investors
owned these pools of loans, and, unable to sell them, and with values
plummeting, they have been forced to write down the value of billions of
dollars worth of these loans on their books. This unfortunate set of
circumstances, created by the lenders' desire to maximize profits
without regard to sound lending practices has led to today's economic
crisis.

The federal government has assured us that it is working on addressing
these issues and solving the "sub-prime" crisis. Much political
discussion has focused on the very issue of regulating and watching
lenders more closely. While I hear much talk of regulating lenders, the
only governmental action I see is a proposed rule that would give
lenders more power in handling title insurance and more control over the
closing escrow process. Under HUD's proposed rule, the same companies
that have created a financial disaster in the American economy would now
be allowed to monopolize the title insurance industry. Handing more
power to a financially irresponsible industry does not make sense.

I urge you to use your good offices to contact representatives at HUD to
ask that the proposed regulations delete these two (2) toxic provisions,
which would benefit lenders at the further expense of consumers.

Thanking you in advance for your consideration.

Sincerely,

Michael A. Manges