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Consumer Financial Protection Bureau

RESPA Task Force to Press CFPB About New HUD-1, Mortgage Disclosures

October 4, 2011

Less than two weeks after sending a letter to the Consumer Financial Protection Bureau (CFPB) expressing concern over disclosure of specific settlement costs, ALTA’s RESPA Task Force will meet with Bureau staff Oct. 5 to learn more about the plans to design a new HUD-1.

As the Bureau transitions into the design phase for a new HUD-1, the Task Force is looking to gain insight from the Bureau about a new HUD-1 and the entire project. The Task Force also plans to urge the Bureau to appropriately disclose owner's title insurance and information that can vary, depending on jurisdiction.

One example of the type of information that the RESPA Task Force is seeking is whether the initial disclosure form will be provided to consumers once or at multiple times throughout the mortgage loan process. Another question is whether the new disclosures will include tolerances.

ALTA Task Force believes effective disclosure requires that consumers obtain necessary information throughout the mortgage and real estate transaction. Thus, there should be some interplay between disclosures that provide initial estimates of a transaction and the disclosures that provide final costs.

ALTA’s RESPA Task Force attempted to address these questions in draft disclosure forms that they developed at the request of CFPB staff earlier this year. In ALTA’s draft disclosures, the Task Force took care to ensure that the forms looked as consistent as possible to make it easier for consumers to compare the initial and final disclosures. This consistency allows consumers to easily discern how accurate some estimates are, and this permits them to ask appropriate questions to understand the differences in quoted charges of their mortgage and real estate transactions.

Under current RESPA regulations, the GFE and HUD-1 work hand-in-hand to guide the consumer throughout the mortgage and real estate transactions.

Many of the line items on the HUD-1 include references to the GFE. Further, many of the estimates in the GFE are linked to the final figures in the HUD-1 through the concept of tolerance. ALTA recommends that the CFPB conduct consumer testing on the value of these links for consumers.

One of the drawbacks of the current HUD-1 is the lack of a simple closing statement or disbursement sheet. ALTA strongly encourages CFPB to produce a new HUD-1 that serves as a disbursement sheet to identify all disbursements in to and out of escrow.

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