CFPB Updates Settlement Cost Booklet
|January 28, 2014|
The Consumer Financial Protection Bureau earlier this month made technical updates to the settlement cost booklet, which was initially prepared by the U.S. Department of Housing and Urban Development.
Changes were made to reflect new mortgage rules under Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), according to the CFPB.
Page 28 includes information about title services and title insurance. The booklet tells consumer that a lender’s policy protects the lender. “If you want to protect yourself from claims by others against your new home, you will also need an owner's title insurance policy,” the booklet states. The description matches what HUD previously said in the booklet about owner’s title insurance.
The CFPB said a larger update of the booklet is planned to reflect the integrated mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act and other changes under the Dodd-Frank Act. The changes are meant to align with other CFPB resources and tools for consumers as part of the CFPB’s broader mission to educate consumers.
In the CFPB’s final rule for integrated mortgage disclosures, owner’s title insurance is labeled as ‘optional’ on both the Loan Estimate and Closing Disclosure. ALTA has warned the CFPB that telling consumers that owner’s title insurance is "optional" will mean that homebuyers may be dissuaded from purchasing the same protection that lenders receive from a title insurance policy. ALTA will continue to work with the CFPB on this issue. CFPB staff said its testing showed that the use of the word “optional” did not impact consumers’ decision to purchase title insurance.