New Closing HUD-1 at the Top of CFPB's Agenda Says CFPB Director to Chamber of Commerce and House Financial Services Committee

April 2, 2012

"Upstanding businesses will benefit the most when those that cheat their customers are held accountable."

That was the main theme as Consumer Financial Protection Bureau Director Richard Cordray; spoke at the U.S. Chamber of Commerce's 6th Annual Capital Markets Summit. The speech to business leaders and trade associations was part of the Director's outreach to the business community in general and especially the financial services community that is impacted by the new regulator.

Director Cordray talked about his roots as an attorney who represented the local chamber of commerce and as a county treasurer who worked to catch tax scofflaws. The real meat of his speech for ALTA members was when he laid out the CFPB's priorities as:

"Honest business means that consumers should not have to worry about hidden fees, impenetrable disclosure statements, or bait-and-switch schemes. The products as advertised should be the products as delivered.

Consumers also need better information about the costs and risks of borrowing. They need to be able to comparison shop for a good deal. They deserve the peace of mind that comes from knowing that the deal they were promised is the deal they are actually getting, not just tomorrow, but next month and next year as well. Honest disclosures are a great equalizer in the markets because they inherently increase competition by depriving any business of an unfair advantage that would result from customer confusion.

We have launched several initiatives in the vein of making costs and risks clear for consumers. Our signature "Know Before You Owe" project is focused on simplifying and streamlining conflicting mortgage forms that have been confusing homebuyers for many years."

On Thursday, CFPB Director Richard Cordray's testimony carried the same message as he presented his semi-annual report to Congress to the House Financial Services Committee.

In his prepared remarks he stated, "One of our primary objectives at the Consumer Bureau is to make sure the costs and risks of these financial products are made clear. People can make their own decisions, and nobody can or should try to do that for them. But it is the American way for responsible businesses to be straightforward and upfront with their customers, giving them all the information they need to make informed decisions. That is good for honest businesses and good for the overall economy."

While most of the hearing focused on the CFPB's supervision program, the issue of new RESPA disclosures was brought up by Representative Judy Biggert (IL) who stated, "I'm told that the simplified RESPA/TILA mortgage disclosure that the CFPB is developing may in fact be more complicated than previous disclosures." Jumping to Mr. Cordray's defense, Representative Luis Gutierrez (IL), responded saying, "I would love to see how we went from seven pages to three pages and made it more complicated. That's what we've done in terms of disclosure of transactions and key terms and something easier on, I agree. I know you are currently testing the document and I congratulate you, that is what we should be doing. But, maybe we did find a way to take seven pages and reduce it to three and make it more complicated."

In addition, Director Cordray fielded questions from Gary Miller (CA) about his bill to allow loan originators to reduce their compensation at closing to cover discrepancy in the amount of closing costs not due to the originator and Shelley Moore Capito (WV) and Brad Sherman (CA) about the ability to repay/qualified mortgage rule.

As ALTA continues to work with the CFPB to find ways to improve the new mortgage disclosures for consumers and industry ahead of the CFBP's July deadline to publish new forms for comment, we will begin to enter what we believe is the third inning of this ballgame and start informing Congress about 1) the CFPB's development process, 2) what the title industry likes and does not like about the draft forms and 3) whether there is anything Congress can do to ensure that these forms work for consumers and industry. I urge you to stay tuned to future editions of the Advocacy Update, Title News and Title News Online to get the latest on what ALTA is working on related to the new disclosures. In addition, you can check out our new web resource Right now, the website is a bare bones compendium of everything ALTA has done on the forms, but in the future it will include a number of resources to help you plan for the upcoming changes.

For more information on this topic, please contact ALTA Legislative and Regulatory Counsel Steve Gottheim at

Contact ALTA at 202-296-3671 or

North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.