Witnesses at January 6 hearing brought numerous objections to bear against reforms to the Real Estate Settlement Procedures Act (RESPA) proposed by the Department of Housing and Urban Development (HUD). The HUD proposals are now under review by the Office of Management and Budget (OMB).
But others see opportunity in the changing business and regulatory environment, particularly the push towards Guaranteed Mortgage Packagees, or GMPs. "Whether it becomes legislated or not, this is what the consumer seems to want," says James Gladden, executive vice president of ATM Corporation of America (Pittsburgh, Pa.) "A number of companies are saying, 'I need to be able to compete and I need to be able to offer these kind of services in a bundled package.'"
This has sparked the creation of settlement service providers, which manage a network of providers and bundle the providers' services into packages. Those pre-priced bundles are then sold to mortgage originators, who can resell them at a markup.
Indeed, ATM recently won a contract to create a national settlement services company as a Pittsburgh-based subsidiary of E*TRADE Mortgage. Upon starting operations in the second quarter of 2004, the company will employ approximately 70 people. In return for its consulting and technology infrastructure, ATM will receive a share of the profits over an initial period of the venture.
ATM's systems are powered by IBM WebSphere and Oracle technology, and written in the Java programming language. "The system has the functionality that you would need to operate a fully-functioning vendor management system, getting orders into your company and processing it all the way through the transaction," says Gladden.
ATM is also helping CitiFinancial to develop a settlement services company, Gladden adds.