Industry News

ALTA Says CFPB Should Use TRID Comment Period to Ease Consumer Confusion

August 2, 2016

The Consumer Financial Protection Bureau on July 29 released amendments to the TILA-RESPA Integrated Disclosures (TRID) rule.

The CFPB’s proposed changes correct technical problems, add clarity and incorporate informal guidance provided by the bureau in webinars into the official staff commentary. The CFPB said it did not intend to revisit major policy decisions in this rulemaking. Because of this, the proposed changes do not correct the inaccurate disclosure of title insurance premiums.

Specifcally, the rulemaking stated that "the Bureau is not proposing any revisions that implicate fundamental policy choices, such as the disclosure of simultaneous issuance title insurance premiums, made in the TILA-RESPA Final Rule."

“Unfortunately, after nearly a year of TRID implementation, consumers around the country continue to receive unclear information about their title insurance costs at the closing table,” said Michelle Korsmo, ALTA’s chief executive officer. “ALTA and our members have sent over 3,000 communications to the Bureau staff explaining that its required calculation for title insurance fees is not accurate and is inconsistent with the Bureau’s mission to better inform consumers.”

ALTA appreciated the bureau taking steps to improve the regulation and provide more formal guidance on TRID, but disagrees with the CFPB’s inaccurate disclosure of title insurance fees on the mortgage disclosures.

“ALTA, and the title insurance industry, has committed significant time and resources over the past five years to ensure TRID doesn’t negatively impact consumers,” Korsmo said. “As the industry that sits at the closing table with millions of homebuyers each year, ALTA is reviewing the 293 pages of the proposal and will encourage our members to submit comments to the bureau staff to ensure homebuyers understand their real estate transaction.” 

ALTA has encouraged the bureau to show actual figures for title insurance costs to the consumer on the Closing Disclosure, to prevent lenders from shifting liability for disclosure mistakes and to use the rulemaking period to provide more formal guidance about how to comply with the rule.

In addition to clarifications and technical corrections, the proposed amendments address a handful of other issues within the rule. Proposed changes include:

• Privacy and sharing of information: The rule requires creditors to provide certain mortgage disclosures to the consumer. The bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The bureau said it understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers, and their real estate brokers or other agents. The bureau is proposing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.
• Cooperatives: The bureau is proposing to extend the rule’s coverage to include all cooperative units. With a cooperative, a buyer becomes a shareholder in a corporation that owns the property. The buyer is then entitled to exclusive use of a housing unit in the property. Currently, the rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the bureau would simplify compliance.
• Tolerances for the total of payments: Under TRID, the total of payments disclosure was determined using the finance charge as part of the calculation. The rule changed the total of payments calculation so that it did not make specific use of the finance charge. The bureau is now proposing to include tolerance provisions for the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge. This change would make the treatment of the total of payments disclosure consistent with what it was prior to TRID.
• Housing assistance lending: The rule gave a partial exemption from disclosure requirements to certain housing assistance loans originated primarily by housing finance agencies. The bureau’s proposed update would promote housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The rule would also exclude recording fees and transfer taxes from the exemption’s limits on costs. Through the proposed update, more housing assistance loans would qualify for the partial exemption, which should encourage lenders to partner with housing finance agencies to make these loans.

The CFPB will accept comments to the proposed amendments until Oct. 18, 2016. Comments may be sent by:

• Email: [email protected]. Include Docket No. CFPB-2016-0038 or RIN 3170-AA61 in the subject line of the email.
• Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.
• Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street, NW., Washington, DC 20552.

Please share your thoughts on the proposed changes with ALTA at [email protected].

Stay tuned to action alerts from the Title Action Network (TAN) and let the CFPB know how the inaccurate disclosure of title fees is causing consumer confusion at the closing table. Not a TAN member? Click here to join. It's free, easy and important advocacy for the title industry.

Contact ALTA at 202-296-3671 or [email protected].