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Consumer Financial Protection Bureau

ALTA Webinar Analyzes CFPB’s Proposed Loan Estimate and Closing Disclosure

July 31, 2012

More than 400 title insurance professionals attended a July 25 webinar provided by ALTA addressing the Consumer Financial Protection Bureau’s proposed regulations and mortgage disclosures.

The webinar, which was the second presentation ALTA has provided, analyzed the proposed Loan Estimate and Closing Disclosure forms, which will replace the current HUD-1, GFE and Truth In Lending disclosures. Participating on the webinar were ALTA CEO Michelle Korsmo, ALTA Task Force member Leslie Wyatt, Francine D’Elia Wirsching of Community First Abstract and ALTA lobbyists.

Click here to access the webinar.

As a resource, the Loan Estimate and Closing Disclosure are available for download with references to specific pages of the proposed rule to get further information on the forms.

“The CFPB wants to design these forms for easy comparison by the consumer,” Wirsching said. “That’s great, but as a consumer and a professional doing closings for many years, I’m not sure they accomplished that goal.”

Wirsching provided an overview of the three-page Loan Estimate, which integrates the two-page early TIL disclosure and the three-page GFE. The lender or mortgage broker must issue the disclosure within three days of the loan application. The loan estimate remains subject to tolerances. Any reference to a cost associated with title insurance must be preceded by the word “title.”

Wirsching said the five-page Closing Disclosure, which combines the three-page HUD-1 and two-page final TIL, is meant to mirror the Loan Estimate. She indicated line numbering is different from the current HUD-1. This form must be issued to the consumer three days before closing.

Wirsching said the second page of the Closing Disclosure is broken into subsections. Subsection A and B are the current 800 section on the HUD-1. Section C is the 1100 and 1300 sections.

“Keep in mind that the totals roll up,” Wirsching said. “This is very important.”

In explaining the page, Wirsching said the Other Costs section is the current 1200 section, the Prepaid section is the current 900 section and the Initial Escrow Payment and Closing is the current 1000 section. Page three of the proposed Closing Disclosure, which features costs rolling up to the top, resembles Page 1 of the current HUD-1. Wirsching noted that the fifth page of the Closing Disclosure requires the settlement agent to provide its license number.

“I encourage everyone to print the forms and look at the each section of the proposed rule that we’ve included in the margins so you can get a better handle of the information and details,” Wirsching said.

Wyatt discussed the software challenges the proposed forms will have on title companies and settlement agents. She stressed that a change in the line numbering will require an enormous amount of recoding of the program, but also documents, invoices, reports and integrations.

Wyatt stressed that the industry must provide comments to the CFPB on how the change in line numbering will result in significant expense. She also said the CFPB requires alphabetizing of fees.

“This will cause a lot of issues including workflow,” Wyatt said. “This will be hard to create templates when fees are not tied to specific line numbers.”

From a technology standpoint, she said software vendors can come up solutions to alphabetize fees but it will make it hard to pull data for particular documents and reports when fees are located on different lines from file to file.

Wyatt stressed that communication between the title and lending industries will need to increase. An example is the cost buckets and whether a consumer shopped for an item. It will fall to the title company to work with the lenders to figure out what items consumers shopped for and where the figure needs to go.

The next call will be held at 4 p.m. Eastern Time, Wednesday, August 8 and discuss the CFPB’s proposed disclosure rule, which would require delivery of the Closing Disclosure three business days before closing. The webinar will address:

  • Who will provide the Closing Disclosure to consumers
  • Exceptions to when new disclosure is required
  • How this will impact closings and your business
  • Technical issues regarding electronic or regular-mail delivery
  • Why you need to join the Title Action Network to keep up-to-date about the rule and how you can take action

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