December 19, 2013
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Title agents still involved with new disclosures
By Andrea Golby
The Consumer Financial Protection Bureau (CFPB) decided to let
the market dictate who was going to be responsible for filling out
the new closing disclosure. This is a win for the industry, but may
mean more flexibility in the future.
“One thing that I found especially positive is the bureau’s
recognition of the vital role that settlement providers provide in
protecting consumers at closing,” said Michelle Korsmo, chief
executive officer of the American Land Title Association. “In
choosing to … allow lenders to continue to work with settlement
agents, the bureau said, ‘Settlement agents and closing attorneys
play a vital role in the real estate settlement process.’ That is
directly from the rule.”
Mary Schuster, president of op2 and vice president of legislative
affairs at RamQuest, pointed out that, in the proposed rule, the
CFPB provided two options for preparing and delivering the
Closing Disclosure. One was that the lender would be solely
responsible for the preparation and delivery of the Closing
Disclosure form. The second option was that the lender would be
responsible for the content but could share the task of preparing
and delivering the form with the title and settlement industry.
The CFPB validated the role of the settlement agent by choosing
option two but made clear that the market is going to need to
work out who performs which duties.
“I don’t think we’ll see a one-size-fits-all approach,” Schuster
said. “We are already dialoguing with lenders to understand what
their needs will be in this arena. I think we will probably see
some lenders who feel that they do need to take the responsibility
for preparation and delivery of the Closing Disclosure in house
because the liability is with them.
“I think that we will see some who want to completely outsource
the preparation and delivery of the Closing Disclosure form to
the purview of the settlement agent,” she continued. “I think
the majority will be a sort of hybrid approach, similar to how
it happens today, with the lender contributing the portions they
know that pertain to the loan and the title and settlement agent
contributing the portions that they know, including transactional
fees, as well as the settlement fees. Practically speaking, it will be
a collaborative product that the lenders will sign off on as final,
just as they do with the HUD-1 today.”
Robert Holman, president of General Title Insurance Co. and cochair of the policy and legislative affairs committee for National
Association of Independent Land Title Agents (NAILTA), voiced
some concern about the future role of the title agent.
“The rule is fairly clear that the creditor is responsible for
delivering the Closing Disclosure form to the consumer, but that
they may use settlement agents to provide the same document,
provided they comply with the final rule’s requirements,” Holman
said. “I think on this score it requires settlement agents to be
more than generally conversant with TILA [Truth in Lending
Act], which will make some title professionals cringe.
“As an advocate for independent land title agents and the title
insurance underwriters who support them, I remain concerned
that the settlement process will ultimately become a medium
dominated and controlled by the lending community,” Holman
continued. “I was pleased the CFPB acknowledged the comments
of NAILTA and other industry trade organizations that advocated
for a split responsibility of settlement agents and creditors, but
I remain concerned that the balance of control could tip sharply
toward the lending community as these reforms continue.”
Title industry members were discouraged that the bureau
continued to describe an owner’s title policy as optional on both
the loan estimate and the closing disclosure.
Reprinted with permission from The Legal Description on December 19, 2013
October Research, LLC. | Copyright 2000-2014 | All Rights Reserved
Find us on the Web at www.thelegaldescription.com
December 19, 2013
“Our concern is that homebuyers may not be afforded and may
not receive the same protections that lenders enjoy with lender’s
title insurance,” Schuster said. “So, we have some challenges
here to continue to educate on this issue.
“We have the rules of the road, so we need to figure out how
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best to operate within them,” she continued. “There are hidden
opportunities in here. … I think it is an issue that can be
managed. The way to mitigate that is through education, through
promotions. We’ve been a little distraught that consumers don’t
understand what it is we do. This is an invitation to educate them
in new ways.”
Reprinted with permission from The Legal Description on December 19, 2013
October Research, LLC. | Copyright 2000-2014 | All Rights Reserved
Find us on the Web at www.thelegaldescription.com
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