[1]The new Consumer Finance Protection Bureau [2] forms have major problems and could create confusion, the American Land Title Association said in a written statement released today in response to CFPB Director Richard Cordray’s testimony to the House of Representatives Financial Services Committee.
"Unfortunately, we're already aware of one major problem with the new CFPB forms," ALTA's chief executive officer, Michelle Korsmo, said in her written statement. "The Bureau's Closing Disclosure, which replaces the current HUD-1 Settlement Statement, inaccurately discloses the fees associated with title insurance premiums for consumers. State law and regulation in half of the United States dictates that consumers must pay title insurance rates that are different than how the CFPB requires industry to inaccurately disclose these fees to the consumer."
In his testimony, Cordray stated the CFPB is "committed to an even-handed approach to rulemaking that maintains important protections for consumers while listening to all stakeholders and making changes where appropriate."
Korsmo believes these new forms introduced by the CFPB will be misleading for consumers and could create confusion.
"Every homebuyer should be well-informed about the accurate costs of homeownership--including what they pay for each service during the real estate closing process. For many consumers, buying a home is the single largest investment they will make in their lifetime,” she said. “It's critical that Director Cordray and the CFPB staff adjust the disclosure forms prior to August 1 to ensure consumers receive accurate information about their mortgage costs. ALTA and our member companies stand ready to help the Bureau ensure consumers are neither confused nor misled at the closing table."
ALTA asked the CFPB to announce a “five-month restrained enforcement period” on the new forms to give businesses time to adjust to new regulations.
“As with previous regulatory reform, only when the new forms are in practice will many issues and defects be discovered,” Korsmo said. “A restrained enforcement period helps our members, and the broader real estate industry, make the changes needed to their business processes and collaborate with industry and regulators to ensure the consumer has a positive experience at the closing table."