Federal housing officials are withdrawing a proposal they said could have saved consumers hundreds of dollars on mortgage closing costs, the Bush administration's top housing official said Monday

A "significant number of questions" have been raised about the proposed changes to the Real Estate Settlement Procedures Act (search), acting Housing and Urban Development Secretary Alphonso Jackson said in a letter to the Office of Management and Budget.

Jackson said he has heard from numerous industry groups and members of Congress who complained they have not had enough time to comment on the proposal. He said he planned to resubmit the plan, but offered no timetable.

The HUD (search) proposal, in the works for two years and submitted to OMB in December, would have encouraged lenders to offer one price to cover all closing costs, such as broker fees, title searches and appraisals. Currently, those costs are itemized.

HUD officials said many homebuyers were confused by all the numbers and that offering one price for closing costs would make it easier to shop around.

According to the Mortgage Bankers Association of America (search), closing costs average about $2,000 per transaction, though that varies widely depending on the price and condition of the house, the amount of the loan and other factors.

Last year HUD had estimated that homebuyers could save up to half the average closing cost if the changes were implemented.

But critics, led by Sen. Richard Shelby, R-Ala., chairman of the Senate Banking, Housing and Urban Affairs Committee, said the proposed changes could lead to lenders hiding fees from consumers.

Jackson was nominated by President Bush in December to replace Mel Martinez, who stepped down from the HUD job to run for a Senate seat in Florida. Jackson has yet to be confirmed by the Senate.

The withdrawal of the rule had nothing to do with his pending nomination in the Senate, Jackson said.