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Consumer Financial Protection Bureau

Four ALTA Members to Participate on Small Business Panel Addressing New Mortgage Disclosure Forms

February 28, 2012

Four ALTA members will participate March 6 on a Small Business Review Panel sharing concerns with the Consumer Financial Protection Bureau how the integrated the RESPA/TILA mortgage disclosure forms will impact closings and their business.

Participating on the panel will be Pam Day of Day Title Services in Richmond, Va.; Celia Flowers of East Texas Title Companies in Tyler, Texas; Dave Windle of Cal-Sierra Title in Quincy, Calif.; and Steve Buckman of Buckman Legal in Washington, D.C.

ALTA expects the panel to have a total of 15 to 20 participants. A company must have less than $7 million in annual revenue to qualify as a small business and serve on the panel. Nearly 98 percent of ALTA’s members qualify as a small business.

Both Day and Flowers are members of ALTA's RESPA Task Force. Among concerns of the Task Force is who will complete the form. The Task Force has recommended segregating the responsibility between lenders and settlement agents for completing the combined form. The CFPB is considering various proposals for delivery of the new Settlement Disclosure to the customer. Alternative one would require the lender to deliver the Settlement Disclosure to the consumer. In alternative No. 2, the lender would be responsible for preparing the TILA-required information on the Settlement Disclosure, and 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 effect of this could be the loss of independent agents all over the country,” Flowers said. “Additionally, it could put the lender in charge of ignoring its own tolerance violations.”

As it stands now, settlement agents do not know how many pages of the new form they may be required to complete.

“I don't know what the cost impact will be on my company until I know whether we have to complete 2 or 5 pages of the Settlement Disclosure,” she said.

Day said that she has lost business since the 2010 RESPA Rule went into effect due to not being on some of the lenders' "provider list" or not being affiliated with a lender. Day expects to discuss whether lenders will want to work with closing agents that utilize the same software platform.

“I handle closings on approximately 15 different software platforms as chosen by the lenders,” she said.

Additional concerns Day has with the proposed Settlement Disclosure are if settlement agents will have to explain the four different rates that appear on the form, including the APR, Note rate, Total Interest Paid (TIP) and the Approximate Cost of Funds (ACF) rate that lenders pay. She also is concerned with language on the signature line of the Settlement Disclosure that says "By signing, you are only confirming that you have received this form. You do not have to complete this transaction because you have signed or received this form."

“Will borrowers think that they haven't closed and the transaction isn't complete because of the language on the final Settlement Disclosure?” Day asked.

When the panel convenes, the discussion will focus on the latest draft forms Tupelo and Basswood, and this 41 page overview of the regulatory proposal and a list of questions.

Prior to the March 6 panel, ALTA will hold a conference call for panel participants to discuss the industry's concerns with the CFPB's proposal.

For more information, contact ALTA's Legislative and Regulatory Counsel Steve Gottheim.

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