U.S. Rep. French Hill (R-Arkansas) said Monday that the Consumer Financial Protection Bureau (CFPB) needs to do a lot more to ensure the industry understand the new TRID-compliant ‘Know Before You Owe’ rules before they take effect. Specifically, Hill wants to make sure that the Bureau clears up confusing language regarding insurance fees in the mortgage process.
Hill, addressing more than 250 attendees during Monday’s Federal Conference & Lobby Day, urged CFPB to correct “the inaccurate disclosure of title insurance fees when policies are issued simultaneously.” Because of the regulation, Hill said, consumers in over half of the United States receive confusing information about their title insurance costs on the new mortgage disclosures.
“Informal guidance is of no value,” he said. “The lack of formal direction from the CFPB has resulted in uncertainty on how to interpret the rules. We need transparency so we can ensure consumers receive the peace of mind they deserve when buying a home or refinancing a mortgage. The CFPB needs to make sure it provides the detail before going retail with Know Before You Owe.”
October 3 marks the day when CFPB will require mortgage servicers to provide a five-page closing disclosure document to all borrowers, and to make sure that those borrowers know what they’re getting into before their mortgages formally close.
The proactive news is that most mortgagees are already giving clients these kinds of documents, well ahead of schedule. In fact, a recent survey by the American Land Title Association (ALTA) found that 92 percent of borrowers are reviewing their closing documents ahead of time and are being counseled by servicers in the process.
Still, more formal leadership from the feds is key, according to Hill. Last year, Hill, House Financial Services Committee leadership, and industry representatives cautioned CFPB that Know Before You Owe could have unintended negative consequences on homebuyers unless there is clearer guidance and language geared towards helping the general public.
For its part, ALTA is delighted that Hill is taking such forward action on the matter. Michelle Korsmo, ALTA’s chief executive officer, said that her company’s primary goal for the Know Before You Owe rules come into formal play is “ensuring consumers receive clear information about their title insurance costs on mortgage disclosures.”
She added that the current mortgage closing disclosure calculation is “inconsistent with the Bureau’s mission to inform consumers about the true costs of their real estate transaction.” We are thankful for Rep. Hill’s commitment to push the Bureau to provide more clarity on TRID to make sure the rule is transparent, practical, and accurate.”