State and Local Reporter - 05/19/2005 (Plain Text Version)

Barry Rutenberg, Chair
Gainesville, Florida

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In this issue:
Oregon’s Measure 37: Breaking New Ground on Property Rights
North Dakota Is 25th State to Enact NOR Law — Missouri , New Hampshire and Oklahoma Pending
Wisconsin Developers/Department of Natural Resources Agree on Superior Environmental Performance
New Roadless Rule Lets States Choose Forest Protection
Dallas HBA Defeats Anti-Builder Charter Amendments
Supreme Court Clarifies Constitutional Property Rights in Lingle V. Chevron
Key Endangered Species Rules Revised in Florida
Industry News form California, Colorado, Georgia, Florida and Arizona
2005 SLGA Conference: Everything You Need to Reserve Your Spot in Phoenix
NAHB Funds Help Builders, Associations Across the Country
Texas, Illinois Consider Anti-Competition Legislation

Texas, Illinois Consider Anti-Competition Legislation

Legislation in both Texas and Illinois is being considered this year under the guise of consumer protection. If passed, the effect of these bills would serve to seriously undermine the very kind of competition that affords home buyers welcomed benefits and a more pleasant overall buying experience.

HB 822 in Texas , and HB 1061 in Illinois are very similar in substance and impact. Both bills state unequivocally that builders are prohibited from offering incentives to a consumer for the purpose of influencing his or her selection of a mortgage lender. Proponents of this legislation argue that these additional “safeguards” are needed to protect consumers against deceptive business practices.

Both the Texas Association of Builders and the HBA of Illinois lobbied against this legislation - arguing that such affiliated businesses have been shown to increase competition in the settlement service marketplace and to give home buyers greater choice and lower costs, without compromising the quality of their title services.

The fact of the matter is that laws already in place allow for healthy competition while providing safeguards for consumers. “The practice of offering incentives is expressly allowed and regulated in the federal Real Estate Settlement Procedures Act (RESPA), which also provides that a builder cannot charge more for the home on the back end,” said Eric Menyuk, Assistant General Counsel for California based Ryland Group, Inc.

Additionally, federal and state consumer protection laws protect buyers from the alleged harms set forth by proponents of the Illinois and Texas legislation.

Empirical data suggests that some home buyers prefer the “one-stop shopping” approach to home buying, and that one-stop shopping offers potential consumer benefits such as convenience and lower costs. The most recent survey on the subject, performed in March of 2002 by Harris Interactive, surveyed 2,052 recent and future home buyers finding that, “82% of home buyers would ‘strongly’ or ‘somewhat’ strongly consider using a one stop shopping service for their home purchase.” What’s more, “Over 90% of home buyers who did not use one-stop shopping programs believed that if they had used one, they would have had a better overall home purchase experience.”

NAHB is in the early stages of designing a survey to measure precise conclusions about the affiliated business activities of home builders across the country.

For more information contact Alex Strong in NAHB’s State & Local Government Affairs department at 800-368-5242 x8279.