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Consumer Financial Protection Bureau

ALTA Encourages Consumer Education, Uniformity of Documents to Improve Closing Process

February 11, 2014

The American Land Title Association submitted a letter on Feb. 7 responding to the Consumer Financial Protection Bureau’s (CFPB) request for information on ways to improve the closing process for consumers and the industry.

ALTA’s comment letter focused on encouraging better consumer education and streamlining the closing process by encouraging better uniformity and less duplication of closing documents. ALTA’s Integrated Mortgage Disclosures Task Force—formerly the RESPA Task Force—offered comments for the letter.

The CFPB was seeking comments to 17 questions broken into five categories. Nearly 400 comments were submitted by the Feb. 7 deadline.

The Bureau wants to encourage the development of a more streamlined, efficient, and educational closing process as the mortgage industry increases its usage of technology, electronic signatures, and paperless processes. The CFPB indicated that anecdotes and information that is provided will be used to research and test solutions that address some of the biggest pain points associated with closing on a mortgage.

“Based on our member’s unique vantage point working with all the parties at closing, we believe that the Bureau should not only focus its study on technological innovations but also on improving consumer education about the closing process and promoting greater uniformity and streamlining in the documentation to meet state disclosure requirements and sell loans on the secondary market,” ALTA said in the letter. “We believe that improved education and promoting uniformity have the potential to help consumers become better prepared for closing and allow them to focus on transaction critical documentation and decision useful information.”

ALTA also says consumers should receive ample time to review the closing documents in order to ask questions. Oftentimes, borrowers see the closing documents for the first time at the closing table. These documents are not uniform and are fairly legal in nature. Thus, if borrowers have questions about the documents, their first chance to ask them is at the closing. Encouraging consumers to become more educated about the transaction prior to the closing will enable consumers to have many of their questions answered before they need to sign their closing documents and will ensure that consumers are more comfortable with the obligations arising out of the transaction, ALTA stated in its letter.

“While there is some risk that this effort could lead to new regulations down the road, the Bureau’s focus on this topic can be a positive thing,” said Michelle Korsmo, ALTA’s chief executive officer. “Figuring out ways to help consumers better understand their transactions is a central mission of the CFPB, and if we as an industry focus on telling our story and emphasizing the valuable role settlement agents play, it has the potential to pay dividends down the road when the industry faces attacks. We look forward to continuing to work with the Bureau to help promote ways to reduce consumer ‘pain points’ at the closing.”

ALTA expects the CFPB to develop a whitepaper last this year based on feedback it receives, followed by some pilot projects to promote streamlining the closing process through electronic documents. ALTA will keep membership informed as this process moves forward.

Meanwhile, the Mortgage Bankers Association, American Bankers Association and Housing Policy Council of the Financial Services Roundtable submitted a letter urging the CFPB to defer the next stage of its Know Before You Owe effort, saying it should wait until further disclosure procedures are implemented.

The letter said the CFPB should wait to examine the process until after the final rule for the integrated disclosures is implemented. The groups said waiting until this happens will allow the CFPB and the industry to evaluate how the new forms impact the closing process.

“We believe such deferral should last until after the RESPA-TILA integrated disclosure rule is implemented and its effects on the process can be fully appreciated,” the letter said. “The new rule is intended to greatly simplify consumer disclosures, eliminate surprises at closing and broadly improve the consumer experience. We believe it makes more sense to wait until after the new rule is fully implemented before delving further into the closing process.”



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