ALTA Asks Bureau to Use Sandbox to Test Disclosure of Title Fees

October 18, 2018

ALTA has requested that the Bureau of Consumer Financial Protection allow lenders and title companies to test the disclosure of title insurance fees to consumers under its TILA-RESPA Integrated Mortgage Disclosure rule (TRID) under the bureau’s Trial Disclosure Program.

The Bureau’s new Office of Innovation proposed a Disclosure Sandbox through revisions to its existing policy to encourage trial disclosure programs. The Policy to Encourage Trial Disclosure Programs was established in 2013, but the bureau has not approved any trial disclosures. The Disclosure Sandbox carries out the bureau's authority under Section 1032(e), which allows it to deem a covered person conducting a trial disclosure program to follow or exempt from a requirement of a bureau rule or certain federal laws.

A Disclosure Sandbox may offer ALTA and its members the ability to test TRID disclosures that provide consumers accurate title insurance charges in actual transactions and provide the bureau the rationale for a permanent fix to TRID’s title insurance disclosures. The Disclosure Sandbox clarifies that applications may be submitted by a group, such as a trade association, on behalf of its members, and may propose a scaled or iterative approach to testing.

In September 2016, ALTA issued a report on a survey that found 40 percent of consumers were confused by the new calculation of title insurance premiums under TRID. Only 27 percent of consumers felt more informed by seeing the bureau’s mandated calculation of title insurance premiums. Based on these survey results, ALTA believes a modification to the TRID-required calculation of title insurance premiums could be the basis of a successful trial disclosure program that improves consumer understanding.

The bureau believes significant opportunities exist to enhance consumer protection by facilitating innovation in financial products and services and enabling companies to research informative, cost-effective disclosures. The bureau also recognizes that in-market testing, involving companies and consumers in real world situations, may offer particularly valuable information for improving disclosure rules and model forms.

In the letter, ALTA asked the bureau:

  • for increased coordination with state regulatory authorities
  • to streamline the application and approval process
  • to provide greater clarity regarding compliance waivers

Click here to file comments on the proposed rule.

The also has launched a new innovation webpage. Here you can find out how to apply to run a disclosure trial or pitch a pilot and learn more about the Global Financial Innovation Network. The link is www.consumerfinance.gov/about-us/innovation.


Contact ALTA at 202-296-3671 or communications@alta.org.

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