The Consumer Financial Protection Bureau (CFPB) has received dozens of comment letters from title agents and settlement attorneys offering recommendations for modifying, expanding or eliminating its TILA-RESPA Integrated Disclosures (TRID) rule.
Many note that the new forms required by TRID can be confusing to consumers. Others said getting finalized Closing Disclosures (CD) from lenders three days prior to closing continues to be a problem.
Leigh Kirby, Lone Star Title Co. of El Paso, Inc. suggested two areas of needed improvement – the stipulation that consumers have three days to review the CD and the disclosure of title insurance premiums.
“As I traveled the state of Texas as a title insurance underwriter representative and also worked as a manager of a small title company during the implementation of TRID, I saw the time, expense companies spent trying to comply without clear procedures on how to do so,” Kirby wrote. “I do think some elements have become clearer to the consumer and there is still room for great improvement.”
Linda Marchalk of Northeast Edge Associates, LLC said it’s rare that lenders provide finalized CDs three days prior to closings.
“They do a preliminary Closing Disclosure to borrower three days prior but hold issuing a final Closing Disclosure and loan documents until day before or day of closing,” she noted.
Frank Pellegrini of Prairie Title Services, Inc. said his company has made significant investments of time and money over the last five years to implement TRID.
“Over the last five years, we have seen that TRID is having success helping consumers better understand their loan terms. Because of its success in this space and the investment made by industry we do not want to see wholesale changes to TRID,” Pellegrini wrote. “However, we still see confusion with our buyers about their closing costs, especially when it comes to the disclosure of the price of title insurance. When I try to explain why the price for title insurance, as shown on the CD, is different from the price they see on their settlement statement, the main response I get is, ‘Why isn’t this shown as it really is?’ ”
Pellegrini said allowing lenders and title companies to quote the accurate price of title insurance as required by state law and rate filings would help improve consumer understanding.
Denise Litzau of Property Title & Escrow LLC said TRID has not slowed the flow of kickbacks from lenders and title companies to Realtors.
“Title [companies] and lenders are being paying for Zillow leads and they are not even getting anything to market,” Litzau wrote. “This is a clear RESPA violation and I have lost a lot of business because I will not violate the law. Also, most joint ventures are not handled legally and are only another kickback scheme. Once again, I have no joint ventures, but have lost a lot of business because I will not participate in this.”
Title agent Denise Doyle said the form created by the industry is “the most confusing document ever created.”
“Buyers are not interested in their TIP, such an absurd acronym, or in any of the other useless information contained on that page,” she wrote. “The intent of the form was certainly good, but as multiple other settlement professionals have indicated, it does little if anything to make anyone’s job easier, nor the numbers any more understandable for the consumer.
“Our mutual goal as lenders and title professionals should be to present clear, concise information to the consumer in a timely fashion,” she continued. “These forms are neither clear nor concise, in that we now have three separate forms, a buyer disclosure, a seller disclosure and an ALTA statement to convey the same information that was contained in a two-page form in the past.”
Wendy Rosenberg, a Florida title agent, also noted confusion caused by the CD.
“Instead of relying on one easy-to-read-and-comprehend closing statement, we now have two that are quite different but yet the bottom lines are the same. It causes much unnecessary confusion and additional paperwork,” Rosenberg wrote. “Not to mention the additional time required for the title company and the lender to go back and forth multiple times until they have matching CDs. In the past the title company prepared the closing statement and simply added the lender’s fees. It is basically a time-consuming process that causes delays in the closing process and adds additional parties to the process leading to more mistakes and confusion.”
Sandra Hock of Penn Title Co. said TRID made the mortgage/title process more difficult for the consumer.
“The 5-6 page Closing Disclosure is too difficult for the average consumer to understand,” Hock wrote. “I agree that the buyer/borrower should have at least 48-72 hours’ notice of what money they are required to bring to closing. However, the old HUD-1 Settlement Statement could have done the same thing, just required to get it out sooner and is easier for the consumer to understand. These new regulations [have] not made the closing end of the transaction any easier. The lender still underwrites to the last minute and then sends the closing package electronically, also at the last minute, sometimes right before closing.”