CFPB Is Urged to Change How Title Insurance Premiums Are Disclosed Under the TRID Rule

While lenders continue to struggle with various aspects of the TILA-RESPA Integrated Disclosure Rule (“TRID Rule”) that became effective last year, one of the more troublesome issues has been the disclosure of title insurance premiums. As a result, an effort is underway in Congress to have the Consumer Financial Protection Bureau (“CFPB”) change the way such premiums are disclosed.

Pursuant to the current TRID Rule, the amount disclosed for the lender’s title insurance policy on the Loan Estimate (“LE”) and Closing Disclosure (“CD”) is the amount of premiums without any adjustment that might be made for the simultaneous purchase of an owner’s title insurance policy and a lender’s title insurance policy, even if there is a discount offered for the simultaneous purchase of both insurance policies. The premium for an owner’s title insurance policy for which a special rate may be available based on the simultaneous issuance of a lender’s and an owner’s policy is currently calculated and disclosed by using the full owner’s title insurance premium, adding any simultaneous issuance premium for issuance of lender’s coverage, and then deducting the full premium for the lender’s coverage.

The CFPB has explained that the purpose of this calculation method is to ensure that the lender’s title insurance premium would not increase if the consumer declines an owner’s title insurance premium. The CFPB stated in the preamble to the TRID Rule that the “clear disclosure of the required cost for the lender’s title insurance alone, and the additional incremental cost to be paid by the consumer for the optional owner’s title insurance premium outweighs the benefit of a technical disclosure of the owner’s and lender’s title insurance premiums.”

Following the CFPB’s April 28, 2016 announcement that it will be issuing a Notice of Proposed Rulemaking (“NPRM”) to clarify certain aspects of the TRID Rule, 74 members of Congress signed a letter to the CFPB dated May 31, 2016 requesting that the CFPB “fix the rule’s requirement that is causing consumers to receive incorrect title insurance premium disclosures.” The letter states that consumers in the majority of states are not receiving an accurate disclosure of their title insurance premiums because the CFPB is not allowing for the calculation of a discounted rate known as “simultaneous issue.” The lawmakers have urged the CFPB to address this issue in the upcoming NPRM in July.

We will provide further updates of this issue once the CFPB has issued the NPRM.

From JDSupra Business Advisor 6/17/16

How Are Home Prices Doing In New York?

From the National Association of Realtors Existing-Home Sales

Latest News

Despite low inventory and faster price growth, existing-home sales continued to rise for the second consecutive month.

• Read the full news release.
• View supplemental market data (Excel: 44 KB)
• See the summary of March 2016 Existing Home Sales Statistics (PPT: 2.12 MB)

The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.

View or print the single family summary for April here:

ehs-04-2016-single-family-only-2016-05-20

Title Agents Press CFPB to Change Title Fee Disclosures

from National Mortgage News/Brian Collins June 6, 2016

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, defines 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.

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.

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, 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.

Q. What does Tradition Title Agency do to ensure a clear title?

A. Tradition Title Agency searches records to find anything that could affect a clear title, such as unpaid taxes or mortgages, easements and judgments, and court actions against previous owners that were not satisfied. Bringing potential problems to light early in the mortgage process allows Tradition Title Agency, lenders, attorneys and clients to work together to remove the risk before the closing. Tradition Title Agency customizes searches to each unique client situation. We do Attorney Searches, Abstracts, Chain of Title, Covenant and Restriction, Easement/Right of Way, Municipal Searches, and whatever your unique situation requires. See our Services page for more on how we can ensure your clear title.

 

Our title application can be found here:

http://www.traditionta.com/title-application/title_application.aspx

Or call 631-328-4410