Privacy and Public Records

CFPB Finalizes Updates to “Know Before You Owe” Mortgage Disclosure

Press Release
July 7, 2017

The Consumer Financial Protection Bureau (CFPB) today finalized updates to its “Know Before You Owe” mortgage disclosure rule with amendments that are intended to formalize guidance in the rule, and provide greater clarity and certainty. The changes will facilitate implementation of the Know Before You Owe rule by the mortgage industry. The CFPB is also releasing a limited follow-up proposal to address an additional implementation issue.

“A mortgage is one of the largest financial decisions a consumer will ever make, and CFPB’s rules help ensure consumers have the easy-to-understand information they need before making a decision that will significantly impact their financial lives,” said CFPB Director Richard Cordray. “Our updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process for lenders and consumers.”

The Know Before You Owe mortgage disclosure rule took effect Oct. 3, 2015. The CFPB’s rule created new, streamlined forms that consumers receive when applying for and closing on a mortgage. In addition to clarifications and technical corrections, the amendments that the Bureau is finalizing today address a handful of other issues within the rule, including:

Tolerances for the total of payments: Before the Know Before You Owe mortgage disclosure rule, the total of payments disclosure was determined using the finance charge as part of the calculation. The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge. The Bureau is now finalizing updates to include tolerance provisions for the total of payments that parallel the tolerances for the finance charge and disclosures affected by the finance charge.

Housing assistance lending: The Know Before You Owe mortgage disclosure rule gave a partial exemption from disclosure requirements to certain housing assistance loans, which are originated primarily by housing finance agencies. The Bureau’s update, as finalized, promotes housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The update also excludes recording fees and transfer taxes from the exemption’s limits on costs. Through the update, more housing assistance loans will qualify for the partial exemption, which should encourage these loans.

Cooperatives: The Bureau is finalizing updates to extend the rule’s coverage to include all cooperative units. Currently, the rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the Bureau is simplifying compliance and ensuring that more consumers benefit from the rule.

Privacy and sharing of information: The Know Before You Owe mortgage disclosure rule requires creditors to provide certain mortgage disclosures to the consumer. The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a Closing Disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is finalizing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.

The finalized amendments are available at:
http://files.consumerfinance.gov/f/documents/201707_cfpb_Final-Rule_Amendments-to-Federal-Mortgage-Disclosure-Requirements_TILA.pdf

In addition to the final rule, the CFPB is issuing a proposal addressing when a creditor may use a Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance. Comments are due 60 days after the proposal’s publication in the Federal Register and will be weighed carefully before a final regulation is issued.

The proposal is available at:
http://files.consumerfinance.gov/f/documents/201707_cfpb_Proposed-Rule_Amendments-to-Federal-Mortgage-Disclosure-Requirements_TILA.pdf

CFPB Seeks Comments on Proposed Mortgage Servicing Rule

CFPB Seeks Servicing Agent Comments on Proposed Mortgage Servicing Rules.  This is an important discussion for Service Providers who work for Mortgage Lenders

 LINK TO CFPB POST

By Erik Durbin and Paul Rothstein – MAY 04, 2017

Today, we’ve released our plan to assess the effectiveness of the Real Estate Settlement Procedures Act (RESPA) mortgage servicing rule. We are asking the public to comment on our plan, to suggest sources of data, and generally to provide other information that would help with the assessment.

Mortgage loan servicers are typically responsible for several activities relating to mortgage loans such as:

  • Processing loan payments
  • Responding to borrower inquiries
  • Keeping track of principal and interest paid
  • Managing escrow accounts
  • Reporting to investors
  • Pursuing collection and loss mitigation activities (including foreclosures and loan modifications) under certain circumstances

In January 2013, the CFPB issued the 2013 RESPA Servicing Final Rule. We amended the rule a few times before it took effect, and we refer to all of the requirements and related amendments that took effect on January 10, 2014, as the RESPA mortgage servicing rule. This rule gave borrowers new consumer protections related to mortgage loan servicing, many of which were aimed at helping consumers who were having trouble making their mortgage payments.

The RESPA mortgage servicing rule requires, among other things, that servicers provide disclosures to borrowers related to force-placed insurance, respond to errors asserted by borrowers in a timely manner, and follow certain procedures related to loss mitigation applications and communications with borrowers. For example, servicers generally must acknowledge written notices of error within five days and investigate and respond to the borrower in writing within 30 days. In general, the consumer protection purposes of RESPA include that servicers respond to borrower requests and complaints in a timely manner, maintain and provide accurate information, help borrowers avoid unwarranted or unnecessary costs and fees, and facilitate review for foreclosure avoidance options.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires us to review some of our rules within five years after they take effect. These formal reviews are called assessments. We are conducting an assessment of the RESPA mortgage servicing rule, and we will issue a report of the assessment by January 2019. As required by law, the assessment will address the rule’s effectiveness in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals of the rule, using available evidence and data. We recently released our plan for the remittance rule assessment, as well.

We see conducting the assessment as an opportunity. Conducting the assessment will advance our knowledge of the benefits and costs of the key requirements of the RESPA mortgage servicing rule. The assessment will also provide the public with information on the mortgage servicing market, and help us to fulfill our commitment to be an evidence-based and effective agency.

We would like your help in improving the assessment.

We invite consumers, consumer advocates, housing counselors, mortgage loan servicers, industry representatives, and other interested parties to comment on our assessment plan. Comments can suggest sources of data, offer other recommendations, and generally provide information that would help us understand the rule’s effectiveness or improve this important work.

We are committed to well-tailored and effective regulations and have sought to carefully calibrate our efforts to ensure consistency with respect to consumer financial protections across the financial services marketplace.

Comments on the plan will be due 60 days after it is published in the Federal Register.

Learn more about your options and rights related to mortgage loans.

For more information on how to comply with the Bureau’s mortgage servicing rules, visit our implementation and guidance page.

Topics:

 

 

Join the conversation. Follow CFPB on Twitter  and Facebook .

 

SEC Addresses Important Cyber-Security Measures for Service Providers

I just completed my PCI Compliance ( Payment Card Industry Data Security Standards report that requires specific security and use of qualified vendors who accept credit card payments on our behalf.) So  data security has been on my plate and on my mind.  I was particularly concerned after hearing about the recent ransom-ware attack that affected business, governments, hospitals and other entities computers in 75 countries including the US…. Scary stuff.

So it seems important to pass on the new SEC information on cyber-security.

“The staff observed a wide range of information security practices, procedures and controls across registrants that may be tailored to the firms’ operations, lines of business, risk profile and size,” as well as “firm practices during this Initiative that the staff believes may be particularly relevant to smaller registrants in relation to the recent WannaCry ransomware incident.”

Key findings from the examination, as reported in the alert, are as follows:

  • Cyberrisk assessment: “5 percent of broker-dealers and 26 percent of advisers and funds (collectively, ‘investment management firms’) examined did not conduct periodic risk assessments of critical systems to identify cybersecurity threats, vulnerabilities, and the potential business consequences.”
  • Penetration tests: “5 percent of broker-dealers and 57 percent of the investment management firms examined did not conduct penetration tests and vulnerability scans on systems that the firms considered to be critical.”
  • System maintenance: “All broker-dealers and 96 percent of investment management firms examined have a process in place for ensuring regular system maintenance, including the installation of software patches to address security vulnerabilities. However, 10 percent of the broker-dealers and 4 percent of investment management firms examined had a significant number of critical and high-risk security patches that were missing important updates.”

The SEC also noted that the Financial Industry Regulatory Authority (FINRA) has created a webpage with links to resources related to cybersecurity. It includes a cybersecurity checklist for small firms and a report on cybersecurity practices, which highlights effective practices for strengthening cybersecurity programs.

It is estimated that the ransomware attack affected more than 200,000 computers in about 150 countries, beginning May 12. The malicious software is known as “WannaCry,” “WCry” and “Wanna Decryptor,” which works by encrypting files and demands payment from users to regain access to their data.

“Initial reports indicate that the hacker or hacking group behind the attack is gaining access to enterprise servers either through Microsoft Remote Desktop Protocol (RDP) compromise or the exploitation of a critical Windows Server Message Block version 1 vulnerability,” the alert states. “Some networks have also been affected through phishing emails and malicious websites.

“To protect against the WannaCry ransomware, broker-dealers and investment management firms are encouraged to:

(1) review the alert published by the United States Department of Homeland Security’s Computer Emergency Readiness Team and

(2) evaluate whether applicable Microsoft patches for Windows XP, Windows 8, and Windows Server 2003 operating systems are properly and timely installed.”

CFPB Updates Use of Service Providers

On October 31st, the CFPB issued updates to lenders  on use of Service Providers. This appears to allow a bit more flexibility for the lender to handle day to day affairs with its Servie Providers and is good news for title companies, abstracting and closing companies.  The update states:

“The Bureau is reissuing its guidance on service providers, formerly titled CFPB Bulletin 2012-03, Service Providers to clarify that the depth and formality of the risk management program for service providers may vary depending upon the service being performed—its size, scope, complexity, importance and potential for consumer harm—and the performance of the service provider in carrying out its activities in compliance with Federal consumer financial laws and regulations. This amendment is needed to clarify that supervised entities have flexibility and to allow appropriate risk management.”

Lenders continue to be advised to:

take steps to review Service Providers and should include, but are not limited to:

  • Conducting thorough due diligence to verify that the service provider understands and is capable of complying with Federal consumer financial law;
  • Requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact or compliance responsibilities;
  • Including in the contract with the service provider clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities, including engaging in unfair, deceptive, or abusive acts or practices;
  • Establishing internal controls and on-going monitoring to determine whether the service provider is complying with Federal consumer financial law; and
  • Taking prompt action to address fully any problems identified through the monitoring process, including terminating the relationship where appropriate.

For more information pertaining to the responsibilities of a supervised bank or nonbank that has business arrangements with service providers, please review the CFPB’s Supervision and Examination Manual: Compliance Management Review and Unfair, Deceptive, and Abusive Acts or Practices.[3]

 

 

 

Insurance Conference Focuses on Cyber Security and Big Data

All Insurance companies are concerned with data privacy and security, especially title insurers and closers who deal with Privacy Laws and the Gramm Leach Bliley Act.  There should therefore be particular interest in the  second annual Global Insurance Symposium, May 26-28 in Des Moines, will include sessions on cyber security, big data and innovation.

Speakers include Thomas Sullivan, associate director of the Federal Reserve board of governors; Daud Vicary Abdullah, president and CEO of the Global University of Islamic Finance; and insurance commissioners Ken Kobylowski of New Jersey, John Huff of Missouri, Ted Nickel of Wisconsin and Kevin McCarty of Florida.

Sponsors include the Iowa Insurance Institute, the Federation of Iowa Insurers, the Iowa Economic Development Authority, the Greater Des Moines Partnership and the Iowa Insurance Division.

For information, click here or follow @ReachDSM on Twitter.

Online Closer Course Coming Soon

I thought I should JUST FIRE MYSELF because this is WAY TOO HARD.  I felt so INCOMPETENT with all these new rules, new laws, new organizations to satisfy (ARELLO, BCA, Commerce, Software Company, complying with the CFPB for secure online payments, etc.  etc. etc.) I thought I’d go crazy!

But, I am happy to announce the online closer course was recently approved by the national Association of Real Estate Licensing Law Officers (ARELLO.org) and is at the MN Department of Commerce for final approval.

It has been a challenge to meet all the new criteria required –

  • Obtaining the Certified Distance Education Instructor (CDEI) designation by taking courses and examinations re: online teaching techniques
  • Filling our a  30 page application for ARELLO approval including CV, bios, describing teaching techniques used in the online course, and a host of other requests.
  • Finding  two well-qualified learners to take the online course to time the 8 hour requirement, along with their resumes, affidavits, comments, etc.
  • Testing the quantity and quality of  questions used  on both quizzes and the Final Examination
  • Creating Affidavits for those taking the courses as to the final examination and proctoring
  • Going to the Bureau of Criminal Apprehension to prove I’m not a villainous scoundrel
  • Developing an entirely different course because there is a  new and totally different state required outline for the class
  • Submitting a roughly 50 page application for the department of Commerce including dozens of exhibits and affidavits
  • Learning a new Learning Management System to verify the time it takes to finish the class
  • Locating a company that complies with the CFPB standard on taking online payments and security issues
  • and about eight solid months of hard work.

But after being RELENTLESSLY STUBBORN, and NOT GIVING UP, I am at last able to take a deep breath.

Bottom line:  “Maybe I won’t fire myself after all.”

 

 

Title Insurers Warned Of Too Many Blanket Exceptions

A Wisconsin State Journal article writes that the Wisconsin Insurance Commissioner Ted Nickel has warned homebuyers in a bulletin that they need to be careful about “blanket exceptions” in title insurance policies.

He wrote that title insurance companies

“have begun to use broad ‘blanket exceptions’ in their title insurance policy form for owners and (consumers), which exclude from coverage the most common encumbrances … that could generally be discovered during a public records search.”

The majority of title insurance policies exclude coverage of the type of information that cannot be found in public records, but there have been some that exempt even public record search results, Nickel said, leaving “little to no coverage for the consumer and does not warn the consumer that the title they are purchasing may have defects.”

The commissioner’s office said title insurance policies typically exclude coverage of “encumbrances” that can’t be discovered via a public records search. But state law says that a policy can be rejected that is “misleading because its benefits are too restricted to achieve the purposes for which the policy is sold.”

New Online Title and Closing Education – a Work in Progress

Award, Achievement, CDEII am pleased to announce that I have just passed the Certified Distance Education Instructor (CDEI) certification! As many of you know, I have been teaching title the traditional classroom way with a passion for many years – title examination, closing, legal descriptions, changes in real estate law, title abstracting and searching. I am a title geek who is now moving to Online Title  Education both for Professional Education and for Pre-license Closer Education.

Going into new online training will be a challenge for me  that I take seriously and look forward to.

I will work hard with you to make online real estate  title education

  • interesting
  • beneficial and
  • responsive to your needs.

I hope many new and former students will become members of my online real estate “family.”  I often get emails from you, and will try to incorporate those into the online classroom along with your questions. Thanks for your support!

Jeanne

India Passes Legislation on Privacy Issues and Offshoring

An interesting article pertaining to the offshoring of Public records has just been written for Chief Information Officers .  It appears that after 100 years of little regulation, and with a rapidly growing data entry industry, India has decided to create some protections and is finally looking at Privacy Issues and problems.  Recently much of the U.S. business of data entry has been moved to Indian, the Philippines and China, where labor is less expensive.   Many in the U.S. have been concerned that their private business is being spread around the globe, making them subject to more identity theft issues.  The privacy laws could make it a bit more of a challenge for U.S. companies to outsource the public records used so commonly in the Title Insurance Industry.   Here is an article from CIO that gives 7 tips to prepare for India’s Privacy Rules.

Private and Public Records – Benefits

By: Darity Welsey

We have all heard about the perils of posting our personal information online. There’s privacy violations, identity theft and credit card fraud just to name a few. What about finding a way that data can benefit us?

It’s seems appropriate that we ought to be able to utilize the vast amounts of information about our likes and dislikes that companies, we most likely haven’t even heard of, have collected about us. And they ought to offer it to us in a format that is easy to download and export to another website for our own purposes.

Don’t we have a right to access data about ourselves? The British government thinks so and they have announced an initiative called ‘mydata.’ The plan calls for asking businesses to provide British consumers with their information in a computer-friendly manner.

There are many ways that we can take our collected data and benefit from it. Comparison shopping for products and services like cell phone service plans, insurance providers, or car rentals would be a breeze. Just download your data from your current provider, analyze it a bit if you want, and upload it into an application or website that will show you what may be your best choice.

Facebook has already taken a proactive stand for you and your data. You can preserve your Facebook content with a one button download tool. You just go to Account Settings-Download Your Information and click on the green Download button. When I did it, there was a message that said it would take a little while and they would send me an email. About two hours later I got an email saying my download was ready. I clicked on the link and downloaded my information. That feature makes it easy to preserve my information for my personal use.

Look for ways that you can use your data for your benefit. It seems like there will be scores of valuable applications and websites which will help you be a better, smarter shopper, like many of the travel and other comparison sites that are out there now. This will help keep businesses on their toes, striving to provide superior products and services, since they know that they will be showing up right next to the competition. Personal data access may be a great boon for the economy and it may be the best thing that has happened for consumers in a long time.

Thanks Darity!      Darity Wesley is CEO and Legal Counsel for Privacy Solutions, Inc. a San Diego based consulting firm. You can always reach Darity at [email protected] or 619-670-9462.

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association