WASHINGTON — A bipartisan group of lawmakers is urging the Consumer Financial Protection Bureau to change how it calculates title insurance fees as part of the new integrated mortgage disclosures.
Seventy-four members of Congress signed a letter to CFPB Director Richard Cordray arguing that consumers are receiving "incorrect" title insurance premium disclosures.
At issue is how the Truth-in-Lending Act/Real Estate Settlement Procedures Act integrated disclosures, or TRID, define title insurance fees. The rule does not allow for the calculation of what's known as the "simultaneous issue," the rate title insurance companies provide to consumers when they purchase a lender's and owner's title insurance policy at the same time. In many cases, the consumer receives a discount on such transactions but would not see that reflected on the mortgage disclosure form.
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Ninety-two percent of homebuyers are reviewing their mortgage documents before closing on the loan since the Truth-in-Lending Act/Real Estate Settlement Procedures Act integrated disclosures, or TRID, went into effect in October, versus 74% previously, a survey by the American Land Title Association found.
May 23 -
The Consumer Financial Protection Bureau will propose changes in late July to its mortgage disclosure rule to provide "greater certainty and clarity" to the mortgage industry.
April 28 -
Bankers are still grappling with vendor software problems, longer processing times and delays in mortgage closings as a result of new disclosures that went into effect four months ago, according to a new survey by the American Bankers Association.
March 1
The CFPB's recent proposal asking for feedback on TRID "is a great opportunity to fix this issue and ensure that your new forms serve as a credible source of accurate information about the true costs of buying a home for consumers," the lawmakers said in the letter, which was signed by Reps. Dennis Ross, R-Fla., and Ed Perlmutter, D-Colo., among others.
The letter is being pushed by the American Land Title Association, which says the CFPB's calculation is confusing.
"We do not think that showing the consumer the actual number they will pay and putting a totally different number on the disclosure is accurate or fair to the homebuyer who already has questions about the transaction," said Wayne Stanley, a spokesman for the group.
The CFPB declined to comment on the title insurance issue. But the agency is working on a TRID mortgage disclosure rule that it expects to issue in July.
"We remain engaged with stakeholders on implementation of the 'know before you owe' mortgage disclosure rule and are conducting listening sessions with groups of stakeholders to gather additional insight into concerns," a spokesman said. "We look forward to receiving all comments on the matters discussed in the proposal once it has been issued."
Meanwhile, the ALTA has created a grassroots network of more than 12,000 title agents who are "prepared to send letters and emails to CFPB staff to let them know what they are seeing around closing tables across the country," Stanley said.
