July 11, 2012
CFPB Unveils Proposed Changes to RESPA
Initial Analysis Shows Industry Concerns Heard in Two Key Areas
The Consumer Financial Protection Bureau (CFPB) issued proposed regulationsMonday afternoon to integrate the current TIL, GFE and HUD-1 Settlement Statement into a set of combined forms as part of the implementation of the Dodd-Frank Act. TLTA is in the process of fully analyzing the 1,100-page proposed regulation and will be providing detailed reports in the coming days and weeks, along with guidance on how you can participate in the critical comment process.
Standardized Form
Though many important concerns still persist at this point, including who will fill out the new form, and there is still much more to understand about the proposal, our initial analysis does indicate that two of our preliminary concerns may be addressed favorably. First, we were concerned the CFPB was considering simply setting guidelines for a model form, which would have allowed different lenders to create different forms. However, the proposal does include the requirement for a standard promulgated form as has always been the case with the HUD-1. This is very good news.
Tolerance Level for Third Parties on Provider List
Secondly, we have been very concerned that the CFPB was considering moving the current 10% tolerance to 0% for those companies who were on the lender's provider list. The proposal does not include that requirement so long as the lender allows consumers to shop by not requiring that parties use a company on their provider list. This specific 0% tolerance issue was TLTA's primary focus as we met with CFPB staff in May and participated at various panels with the Bureau to discuss the proposed rules. We talked directly with key CFPB staff about our concern that such a policy would drive lenders to potentially move the settlement function in-house to avoid liability, therefore driving title agents and small businesses out of the settlement process, leaving consumers without the important neutral third party involvement. We are very pleased to see that the CFPB heard and addressed our concerns in this proposal.
It is important to note, however, that the proposal still contains a new requirement that third parties affiliated with the lender would now be held to a 0% tolerance. We are assessing what the impact of that change would be on lender-affiliated title agencies.
Again, we are still reviewing this massive rule proposal and will be providing more in-depth analysis along with our positions on what needs to be changed and what portions of the rule may have a negative impact on the title industry, as well as on consumers and the closing process in general. The TLTA Board of Directors is also meeting next week and will begin to develop official positions on the rule proposals. According to the CFPB's press release, the initial deadline for commenting on certain portions of the proposed rule will be 60 days or by Sept. 7, 2012, while comments on other aspects of the proposal are not due until Nov. 6, 2012.
You may review the full proposal and supporting documents here as well as some additional articles you may find of interest below. It will be critical that you provide detailed and individualized comments to the Bureau on this matter of such importance to our industry, so please stay tuned for more specific guidance on how and when to comment. As you review the proposal, please let us know your thoughts so we can incorporate them into the process. Simply email Aaron Day at
[email protected] or call him at 512.472.6593.
Additional Reading
CFPB Rule Proposal Read More >
ALTA: Proposed CFPB Closing Rule Could Reduce Title Agents Role Read More >
Washington Post: Consumer Watchdog Agency Proposes New Mortgage Disclosures Read More >
President Obama Signs Flood Insurance Reform Bill
Insurance Journal | July 9, 2012
President Barack Obama has signed the "Biggert-Waters Flood Insurance Reform and Modernization Act of 2012" into law. The law extends the National Flood Insurance Program (NFIP) for five years and makes reforms to the program. The Senate and House passed the legislation on June 29 as part of a conference report package along with the Surface Transportation Act of 2012 and an extension of the Federal Direct Stafford Student Loan program. The legislation also calls for reforms including phasing out subsidies for many properties, raising the cap on annual premium increases from 10 percent to 20 percent, allowing multifamily properties to purchase NFIP policies, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina, and establishing a technical mapping advisory council to deal with map modernization issues. Read More >
No 3.8% Tax on Real Estate Sales
Texas Association of Realtors
A false rumor about a 3.8% transfer tax on all real estate sales has been going around on the Internet and in emails. The false information claims that the Affordable Care Act contains a 3.8% tax on all real estate sales. This is not true. While the act does include a 3.8% tax on some investment income, it will not come into play for the majority of home sales. First, the tax applies only to people with adjusted gross income of $200,000 ($250,000 for a joint return). Also, homeowners who sell their principal residence will still enjoy the exclusion of $250,000 of gain realized on the sale of the home ($500,000 for married couples). Read more about this topic in this