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Consumer Financial Protection Bureau

The New CFPB Rule, Data Sharing and Archive

August 5, 2014

By Wyatt Bell

Data sharing and archiving has been a part of the title insurance and real estate settlement process since the beginning. The data stream—items such as names, addresses and numbers like the sales price and loan amount, have transmogrified from literally making handwritten duplicates to the modern digital XML documents which now stream between data centers via web services.

It is important to realize that the data has not changed. We still use and will continue to use names, legal descriptions, requirements, exceptions, notes and mortgages, etc. It is rather important to understand it is the transport underneath the data which has changed. We have moved from pen and paper, to copy machines to fax machines to PDF documents to XML documents and so on. A rich data set rides atop whatever transport we find best suited to meet the needs of the transfer. One can even use the telephone to speak a name to a computer, which looks up an account.

The Consumer Financial Protection Bureau (CFPB) released its final rule for new integrated mortgage disclosures on Nov. 20, 2013. Effective Aug. 1, 2015, a new five-page Closing Disclosure will replace the HUD-1 and final Truth-in-Lending (TIL) disclosures, while a three-page Loan Estimate will replace the GFE and early TIL. The new disclosures, and the regulations that mandage them, will require settlement agents and loan originators to share information much more closely in order to be compliant.

The proposed CFPB Rule of July 2012 had mandated a digital archive of the Loan Estimate and Closing Disclosure data set in "machine-readable format." It specifically noted that Word, PDF and text documents do not meet these requirements. On Page 8 of the CFPB's final rule, the CFPB suspended this requirement, but noted:

"The proposed rule also would have required creditors to keep records of the Loan Estimate and Closing Disclosure forms provided to consumers in an electronic, machine readable format to make it easier for regulators to monitor compliance.

Based on public comments it received raising implementation and cost concerns regarding [this] proposal[s], the Bureau has determined not to finalize [this] provision[s] in the final rule. The Bureau continues to believe [this] idea[s] may have benefits for consumers and industry, however, and intends to continue following up on [this] issue[s]. For example, the Bureau intends to work closely with industry on private data standard initiatives to promote consistency in data transmission and storage. After additional study, the Bureau may propose rules …."

It can be concluded, however, that a "machine-readable archive" will be implemented at some future point to meet the CFPB's monitoring requirements. The CFPB wants to have the Loan Estimate and Closing Disclosure information—such as names, addresses, loan charges, title charges and other data—available in digital format so that it may be manipulated by a variety of applications such as an Excel spreadsheet or an Access database. This provides the basis for data mining and trending. Most software engineers agree that XML would be the document form to contain this dataset.

One note of reference is "Holder in Due Course." This legal principle provides that one who is assigned a note from another does so free of defenses of the maker. The proof for such legal basis is an "original." There has been no computer counterpart to the "original" devised so far that is as simple as the wet ink signature and paper. Many attempts at digital-key signatures have been attempted but their complexity and implementation has yet to achieve wide acceptance. Therefore, paper remains to this day. The CFPB does not mention this anomaly in its pursuit of digital commerce. Important issues such as this must be resolved to achieve a true digital transaction.

XML stands for Extensible Markup Language. This specification originated around the turn of the century (year 2000) and it has become a standard by which data is stored and transmitted between systems. It has a very simple construct. It goes like this:

Mark Goodwin

123 Main Street


The XML "tags" (enclosed in angle brackers) identify each item. These tags can mark any type of data, but there must be an agreement between the senders and recipients so each knows precisely how the data set is defined. In other words, if the sender uses "" and the recipient uses "" then no data agreement exists and the expected information exchange fails.

This is the most pressing problem with XML. Each sender or recipient can specify their own tags and there must be agreement between the two for data interchange to work.

Just imagine if each fax machine or email sender and recipient differed in their communication protocols. Your email or fax world would be severely limited. That is the current state of affairs with XML.

The other issue that comes into play is how this XML file, once agreed upon, then moves throughout the cyber world. Most often, communication between systems is done according to web services. This is a process where one computer basically calls another computer by its unique phone number, so to speak, and commences a digital conversation wherein the XML file is sent by one computer and received and acknowledge by the other. Again, web services are designed such that each service is unique and programming must be done to accomplish the full duplex of communications.

The new CFPB rule does not identify any specification for the data sets comprising the Loan Estimate and Closing Disclosure. It has stated this will be left to the lending and closing industries to define. There are several schemes being proposed, one of which is being developed by ALTA's Combined Mortgage Disclosures Forum.

The bigger issue is whether a single-point repository is going to be developed for this data archive or if the commerce is going to splinter with each lender providing a different XML specification for the Loan Estimate and Closing Disclosure data-set thereby necessitating a different connection and collection center for each.

This is the turf of ALTA members. As settlement agents who collect and amalgamate data for real estate settlements, we should drive and specify the facility for this archive. Such repository should be an open specification that would allow the storage of the "machine readable" digital data-set.

As mentioned above, if attempts in meeting this requirement are cloaked in proprietary designs and specifications—together with varying degrees of cost and access tolls—then achievement of a smooth and transparent archive process which meets the goals of the CFPB will fail. It is important that a single-point repository be presented to the industry to remove this obstacle from the implementation of the CFPB's data collection requirement.

Many software providers, including Landtech, provide a full complement of XML capability to meet any specification. However, an industry-wide solution would make an important imprint in the commercial landscape of real estate settlements. A central system developed via ALTA would send an important message about the industry's commitment and dedication to the real estate settlement process.

Wyatt Bell is president of Landtech Data, a software provider to the title and real estate industry. He can be reached at

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