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Consumer Financial Protection Bureau

Tips on Commenting to CFPB About Proposed Mortgage Disclosures

September 27, 2012

ALTA’s Title Action Network presented a webinar on Sept. 19 titled “Making Your Voice Heard: Tips for Providing Public Comments to the CFPB” to address key concerns regarding the proposed regulations and share tips on commenting to the CFPB in order to have an effective impact on the rulemaking process.

On July 9, the CFPB released a 1,099-page proposed rule to go with a new Loan Estimate and Closing Disclosure that will replace the current Truth-In-Lending (TIL), Good Faith Estimate (GFE) and HUD-1 Settlement Statement (HUD-1) disclosures.

Participating on the webinar were Richard Horn, senior counsel at the CFPB, Tim Evans, president of Evans Title and chair of the Title Action Network, Marvin Stone, senior vice president of business integration at Stewart Lender Services and Steve Gottheim, ALTA’s legislative and regulatory counsel.

Horn reiterated that the CFPB is engaged in industry outreach and will read and analyze every letter it receives. The Bureau has already received about 500 comments and expects more come the Nov. 6 deadline. The easiest way to submit comments is online, according to Horn. He encouraged ALTA members to provide information about real life examples on how the forms will impact your business, closings and consumers.

“We want to know how long it will take to implement this rule, what kinds of costs you will incur to implement, how long it will take to train your staff,” Horn said. “Anything specific about this will be helpful.”

Comments may be submitted online by clicking here. Also, send your comments to ALTA at so that we can incorporate them into ALTA’s official comments to the CFPB.

Horn said the CFPB wants to avoid issuing hundreds of FAQs to explain the rule after its implemented. This was the case following the 2010 RESPA reform.

As an example, there’s a list of exemptions to the three-day disclosure requirement. Horn said that if there are other situations that should be included, the CFPB wants to know. Currently, one of the exceptions to having to reissue the Closing Disclosure is if changes amount to less than $100. Horn asked for comments if this number is sufficient, if it should be higher or if it should be a percent instead of a flat-dollar exception.

“We want comments to be specific,” Horn said. “We have a statutory mandate to integrate these forms and there’s nothing we can do about that, so we are attempting to strike a balance between the needs of consumers and facilitate compliance for the industry.”

He said the quantity letters isn’t as important as the quality. Horn said form letters should also include real-life experience. Data will prove the most useful for the Bureau to back up anecdotes.

Evans reviewed some of the most problematic areas of the proposed rule that will impact the industry. Currently, settlement agents are required to provide the HUD-1, while lenders provide the revised TIL disclosure. The Bureau has proposed two alternatives for which party is required to provide consumers with the new Closing Disclosure form. Under the first option, the lender would be responsible for delivering the Closing Disclosure form to the consumer. Under the second option, the lender may rely on the settlement agent to provide the form. The Bureau seeks comment as to which alternative is preferable.

When commenting, Evans encouraged ALTA members to consider these issues regarding who provides the Closing Disclosure to the consumer:

  • If the lender becomes responsible for preparation and delivery of the final Disclosure Form, what role settlement agents will continue to play in the transaction?
  • Will settlement agents continue to aggregate information for the Closing Disclosure from other parties outside the realm of the loan itself i.e. real estate commissions, homeowner’s associations, obtaining payoff of debts, ordering final utility readings, ordering surveys, collecting back child support or other government liens and debts?
  • If the settlement agent continues to be the gatherer of these vital elements of a transaction that lie outside the requirements of the loan itself, will the settlement agent continue to act as the disbursement agent for all loan proceeds, some loan proceeds or no loan proceeds at all?
  • If the settlement agent no longer plays a role, then how will the lenders begin to incorporate all of these facets into their daily operations?
  • What unintended consequences or moral hazards could present themselves if a lender is handling the closing and the disbursements?
“Consumers look to us to be timely and look to us to handle the transaction an efficient manner,” Evans said. “If we lose productivity through these new regulations, it will impact production and how we serve our customers. Stories on how we can convey this to the Bureau is important.”

Additionally, the Bureau has proposed the consumer receive the Closing Disclosure at least three business days before the consumer closes on the loan. When formulating comments to the CFPB about this, Evans encouraged title professionals to consider:
  • How often do closing costs change within 3 days of closing?
  • What are the reasons these costs change?
  • What other exemptions to the rule might be warranted to ensure the consumer is not harmed by a delay?
“We want to convey things in real-life examples,” Evans said. “It’s our experiences at the closing table that the Bureau wants to hear about. Analyze how your agency be impacted by considering training costs, how many people you employ, how the proposal will impact your productivity and how consumers could face loss of rate locks and increased cost.”

Instead of waiting until Nov. 5, Evans suggested ALTA members set aside 30 minutes every other week to address and outline concerns about certain aspects of the proposal.

Stone provided information on how to go through a checklist in order to decipher how the regulations could impact revenue. He said it’s key for ALTA members to consider implementation and operational costs.

Implementation costs are comprised by technology (software upgrades) and training. Stone said agents will need to consider hardware requirements along with a software implementation fee from a vendor.

“You’ll also have to allocate your time and resources or your staff to implement and work through the details,” Stone said.

Agents must also consider how they will securely transmit and store the new documents.

“You will need a secure means or process to establish workflow with your lender,” Stone said. “It’s interesting that we rely on email every day, but email is perhaps not the best workflow with lenders in regard to disclosures. This may require a new system or may be a part of your current title production system that will need to be enhanced.”

In addition, training will be required. This does not only comprise closers and back office support, but also training of lender partners to educate them regarding new workflows.

While these are one-time implementation costs, operational costs are not as clear and vary based on location, mix of customers and how they will want to handle the Closing Disclosure.

The proposal may result in more workflow back and forth with the lender or the possibility of pre-closing calls from consumers with questions about the Closing Disclosure.

“Title agents may have to start taking phone calls that they haven’t had to handle before,” Stone said.

Key to smaller operations will be the impact on other work. Stone said agents should think about additional keying of new lender data from Loan Estimate onto Closing Disclosure; how often and how long pre-calls could take; possibility of the increase of redisclosures; monthly cost or transactional costs for systems not already in place; and possibility of various work streams dependent on how lender handles disclosure delivery.

“Agents should create a checklist of possible costs,” Stone said. “It’s important to talk to your lenders and find out how they will want to handle the closing disclosure.”

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