Deadline April 16 to Give Feedback on Proposed New HUD-1
|April 13, 2012
The deadline to provide feedback on the Consumer Financial Protection Bureau’s (CFPB) integrated disclosures, which will result in a new GFE and HUD-1, is April 16.
The CFPB, the new regulator in charge of RESPA, is integrating forms required under the Truth in Lending Act (TILA) and Real Estate Settlement and Procedures Act (RESPA), and ALTA encourages members to let the CFPB know how these draft forms will impact your operations. The CFPB plans to publish the rule and forms by July 21. It’s expected there will be a 90-day comment period.
Click here to view prototypes for the Loan Estimate (which will replace the GFE) and the Settlement Disclosure (which will replace the HUD-1) here. Click here to send feedback to the CFPB.
In reviewing the draft Settlement Disclosure Form, members of ALTA’s RESPA Task Force have concluded the form as it stands now will result in two less closings per day. The title industry estimates that using the current versions of CFPB’s draft forms in accordance with the regulatory outline will:
- increase costs to small business settlement providers by as much as $800 per employee in upfront implementation and training costs;
- cost $2,360 to train lenders, Realtors and other customers;
- result in a 20 percent increase in yearly software maintenance fee; and
- cause a 20 percent decrease in annual revenue due to decreased productivity.
An itemization of these costs
is detailed in Exhibit “A” of a letter ALTA sent to the CFPB.
These significant additional costs are due mainly to four distinct problems with the draft forms and regulatory proposal:
- the reformatting of the settlement statement;
- the lack of uniformity in lender practices;
- the requirement to provide the settlement disclosure three days in advance of closing; and
- the logistics of coordinating delivery of the settlement disclosure when some costs are known only to the lender while other costs are known only to the settlement agent.
The CFPB also has proposed two alternatives for assigning responsibility for providing the integrated Settlement Disclosure to the consumer. The first alternative would make the lender solely responsible for delivering the Settlement Disclosure to the consumer. Option two would make the lender responsible for preparing the TILA-required information on the Settlement Disclosure. The settlement agent would be responsible for preparing the RESPA-required information. However, the lender and settlement agent would be jointly responsible for providing the consumer with an integrated Settlement Disclosure three days before closing, the CFPB said in its outline.
Under the first alternative, shifting responsibility for delivering the Settlement Disclosure from settlement agents to lenders would likely alter settlement agents’ role, but the exact impact is difficult to predict, the CFPB said in its outline. While lenders and settlement agents already coordinate completion and provision of the current HUD-1, if lenders were responsible for providing the Settlement Disclosure, these relationships may need to be renegotiated or formalized, which could require personnel time and result in legal fees for outside counsel.
ALTA’s RESPA Task Force has suggested the Bureau bifurcate the Settlement Disclosure to delineate responsibilities between settlement agents and lenders. ALTA is working to ensure our members’ roles in the settlement process continue. That’s why it’s important to provide feedback to the CFPB and explain to policymakers that your fundamental role as the guardian for the consumer as a settlement and disbursement agent is not put in jeopardy by these forms.
to view updates and the latest information on what ALTA and its RESPA Task Force is doing to advocate on your behalf to ensure the new forms benefit consumers and industry.
For more information, contact Justin Ailes
, ALTA’s vice president of government and regulatory affairs.