ALTA Requests 5-month Restrained Enforcement for CFPB Disclosures

March 5, 2015

While Consumer Financial Protection Bureau (CFPB) Director Richard Cordray testified today before the House of Representatives Financial Services Committee, ALTA requested that the bureau follow a restrained enforcement period after the new TILA-RESPA integrated disclosures (TRID) go into effect Aug. 1.

“In 150 days, new disclosure forms for real estate transactions will completely change the homebuying process as it’s known today,” said Michelle Korsmo, ALTA’s chief executive officer. “As our member companies work to implement these new forms on Aug. 1, we strongly urge Director Cordray to announce a five-month restrained enforcement period so that new business processes can be adjusted to comply with these regulations.”

When the Good Faith Estimate and HUD-1 Settlement Statement were revised in 2010, HUD exercised a fourth-month restraint in enforcement. ALTA is hopeful the CFPB follows the same path in enforcing the rules for industry members demonstrating that they are making a good-faith effort to adapt to the new regulation and comply with TRID requirements. During the 2010 reform, changes were made to the way fees are shown on the HUD-1. The TRID regulation requires changes to internal operations and procedures, and technology platforms. The regulation this time eliminates line numbering that has been used on the HUD-1 for decades, changes how fees must be listed and formatted, and has new requirements for when the disclosures must be provided to consumers.

The enormity of the changes is why ALTA has requested a non-enforcement window for those attempting to comply. As with previous regulatory reform, only when the new forms are in practice will many issues and defects be discovered.

“A restrained enforcement period helps our members, and the broader real estate industry, make the changes needed to their business processes and collaborate with industry and regulators to ensure the consumer has a positive experience at the closing table,” Korsmo said.

When responding to a question from Rep. Randy Neugebauer (R-Texas) during the hearing, Cordray indicated that a period of restrained enforcement would not be followed.

“People will have had 21 months to implement this regulation," said Cordray, who added that the TRID rule was finalized in November 2013. “People should not be surprised by this.”

Responding to a follow up question from Rep. Brad Sherman (D-Calif.) about restrained enforcement, Cordray said the bureau “won’t come in day one and bring the hammer down, but people should take the Aug. 1 date seriously.”

While industry has been preparing since the rule was finalized, ALTA reminds the bureau that for more than 30 years, federal law has required lenders to provide two different disclosure forms to consumers applying for a mortgage. The law also has generally required two different forms at or shortly before closing on the loan. Under RESPA, title and settlement agents have had a protected right to prepare and deliver the HUD-1. This protection ends Aug 1 when the new Loan Estimate and Closing Disclosure go into effect and complete change the closing process.

One major problem with the new forms is that the rule requires the inaccurate disclosure of fees for title insurance premiums. State law and regulation in half of the United States dictates that consumers must pay title insurance rates that are different than how the CFPB requires industry to inaccurately disclose these fees to the consumer. Title insurance premiums are the only fee that the TRID regulation prohibits providers of consumer financial products and services from telling consumer the actual amount they will pay.

Here’s an example of how the TRID regulation requires the inaccurate disclosure of title insurance premiums in Texas. A consumer who buys a $200,000 home in Texas using a $190,000 loan will pay:

  • $1,429 for an Owners Title Insurance Policy
  • $100 for a Lenders Title Insurance Policy

TRID requires that the fees be disclosed like this:

  • $155 for an Owners Title Policy
  • $1,374 for a Lenders Title Policy

“Every homebuyer should be well-informed about the accurate costs of homeownership—including what they pay for each service during the real estate closing process,” Korsmo said. “For many consumers, buying a home is the single largest investment they will make in their lifetime. It’s critical that Director Cordray and the CFPB staff adjust the disclosure forms prior to Aug. 1 to ensure consumers receive accurate information about their mortgage costs. ALTA and our member companies stand ready to help the Bureau ensure consumers are neither confused nor misled at the closing table.”

Contact ALTA at 202-296-3671 or