This 2009 session, Virginia's General Assembly is poised to expand the Consumer Real Estate Settlement Protection Act. Presently the Act requires that consumers be given a statement explaining the role of a settlement agent, and indicating that they have the right to select their own settlement agents. This is true, of course, and being given notice is all good and well, but notice alone lacks the teeth to really protect consumers. This is because some lenders who want to avoid the effect of the law do so by including contractual language in their loan documents whereby consumers voluntarily give up or "waive" the right make their own selection of a settlement agent in exchange for getting a loan. These lenders then introduce their own settlement agents into the transaction, often at a greater expense to consumers than the consumer might pay to a local settlement agent. Such lenders' choices of settlement agents are normally companies that want lenders' repeat business, and that are willing to overlook the duties they owe to consumers if needed to keep the real client--the lender-- happy.
It looks like this loophole will be closed with the passage of HB 2568, a provision that will say the provisions of the Act "may not be varied by Agreement, and rights conferred by this chapter may not be waived. The seller may not require the use of a particular settlement agent as a condition of the sale of the property."
The General Assembly is to be commended for plugging this gap in the statute.
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