CFPB Issues Report on “Pain Points” at Closing

There were few surprises in the Report Issued by the CFPB  from those who elected to respond to the “Request for Information” about closings.  It’s too complicated, and becoming more complicated by the day.

The 69 page report reviewed information it received from its recent  public Survey-about the challenges consumers face when closing on a home. The Bureau identified several “pain points” consumers regularly experience during the closing process. Consumers reported being frustrated by (among other things)

  • The short amount of time to review a large number of closing documents
  •  Not understanding the documents and the legalese terms;
  • The lack of resources providing explanations about closing documents, which are full of technical jargon; and
  • Errors in the quantity of paperwork resulting in long delays.

Our legislators, while hoping to make things clearer for the consumer, continue to make the process more complicated. In my opinion, the average consumer does NOT want to know the maximum amount they could pay for a loan, including principle and interest, points and expenses if they keep the loan for thirty years as disclosed on a TIL.  How many people keep the same house for thirty years with the same mortgage? But that is a requirement under the TIL law.

In CFPB’s defense, it oversees just a small piece of the process and has been mandated to combine the HUD-1 and TIL – a difficult undertaking. And it has  made excellent strides in asking the stakeholders for advice.  Lenders, states, counties, title companies, attorneys and others all impact the process and have input that the CFPB is considering and taking seriously.  I hope that the results will be as good as the process involved.

Just a thought for e-closings – Why not make the detailed  information available to those who wish to review such information without requiring that all the information be covered.  It’s overwhelming to read 100 pages and if the consumer knows that a FNMA mortgage is a standard form for the state and CANNOT be modified, there should be some comfort in that.

But right now, it’s too much noise- like the mail I get from the bank almost daily.  Every mailing includes multiple pages of disclaimers from the bank. There is so much “noise” in all the mail, that we miss the point. Who reads all that jargon.  I think the average consumer wants to know the monthly outgo – i.e. what is the total monthly PITI?  After that, the mortgage Note and mortgage deed, and title deed need to be explained. But to spend an hour going over a hundred pages of disclosures is just too much – both for the closer and the consumer. I love the idea of the consumer being able to read the documents online and choose the level of understanding, with an explanation to clarify the point of each document BEFORE the table closing.

E-closing would make all our jobs easier and the consumer much more comfortable with the process.  What do you think?


ALTA Comments on CFPB Report on Consumer Experiences at Closing

Press Release

Our members strongly support efforts to identify and alleviate the pain points consumers have experienced during the home closing process,” said Michelle Korsmo, ALTA’s chief executive officer. “While we are focused on technology and the ability for us to receive, sign and return, and retain electronic documents, we cannot lose sight of the importance of personal interaction during the closing process. At the end of the day, consumers are not buying a home from a computer.”The American Land Title Association (ALTA), the national trade association of the land title industry, released the following statement today from CEO Michelle Korsmo in response to the Consumer Financial Protection Bureau’s report on consumer experience during the mortgage closing process:

“Improving the closing the process through technology by providing electronic documents to the homebuyer will help give the consumer more to time to digest the information about their purchase prior to the closing. We agree with the CFPB that any implementation of new technology in the home closing process should not reduce opportunities for consumers to ask information or replace the ceremony of the closing process which indicates the importance of the transaction. Based on our members’ unique vantage point working with all the parties at the closing table, the Bureau should not only focus on technological innovations but also on improving consumer education about the closing process. The new integrated mortgage disclosure forms that the CFPB developed and will be implemented in August 2015 will help ensure the personal interaction and explanation remains part of the closing experience for consumers.”

“We look forward to continuing to work on this important initiative with Director Cordray and staff at the CFPB on this important consumer initiative.”

Supreme Court RESPA Case Could Affect Host of Suits Against Banks

The Supreme Court has agreed to hear a Real Estate Settlement Procedures Act case whose outcome could shield banks and other lenders from litigation under a wide range of federal and state laws according to Bank Investment Consultant.

“The advice of the person making the referral may lose its impartiality and may not be based on his professional evaluation of the quality of service provided if the referror or his associates have a financial interest in the company being recommended,” Dryovage wrote in the brief.
Moreover, the real estate industry is structured so that settlement service providers do not compete for a consumer’s business directly but almost exclusively rely on referrals from real estate brokers, lenders or their associates for their business, Dryovage argued.
Such arrangements “effectively reduce the kind of healthy competition generated by independent settlement service providers,” she wrote.

Closing and Equitable Title

Another good Equitable Title Post for mortgage and title closers. Shows what can happen when intentions to maintain an interest are not turned into reality because the language was not clearly spelled out when creating the deed.  Creating legal documents is much more than filling in the blanks.  A portion of the lawsuit reads:

The first lender intended to retain a security interest on the second parcel for the two remaining loans. As we explain below, that is not what happened, and we must address the issue of whether the title and sub-escrow company is liable to the first lender.

Read more from here

Changes in Closing Under the Consumer Financial Protection Bureau

The new Consumer Financial Protection Bureau (CFPB) published the first of a series of five question interviews with Treasury officials. Elizabeth Warren, Special Assistant to the President, is the lead administrator of the CFPB and answered the Questions below. This is of special interest to closing professionals because the CFPB will play a key role for Title Insurers and Closers in revising the closing  process. A simplification of Documents would be greatly appreciated.  For mortgage closers, the explanation process at closing has become quite complex and overly burdensome because, for most people, the mortgage process and mortgage fees are buried in a foreign language.


1) With hundreds of problems in the consumer financial products and services marketplace that the CFPB could chose to focus on, how do you decide where to dive in and begin? What have your top priorities been out of the blocks?

Credit cards are a top priority because they are the most widely held credit product in the country. Four out of five families have a credit card and 50 million American families cannot pay off their credit card debt each month in full.

Mortgages are the other top priority because they are the single most important financial decision that most families will make. We have learned from recent history that a bad mortgage can not only destabilize an entire family, but that enough of them can destabilize the entire economy.

2) You frequently cite streamlining disclosures as a way to level the playing field and give families better tools to make the choices that are best for them.  When will consumers start seeing a difference?

Consumers can already see a difference. Look at what the banks are advertising right now and see how often phrases like “simplicity,” “no tricks” and “clarity” are showing up. The industry recognizes that these consumer credit markets have to change.

3) Your first week on the job, you and Secretary Geithner held a mortgage disclosure forum at Treasury and just this week, the CFPB implementation team held a follow up symposium. What have you learned from these sessions?

The current disclosures increase costs for lenders while providing very little benefit for consumers. We want to reverse that and decrease the costs of disclosure while increasing the value to consumers. The way to do that is to make that disclosure clearer and more usable for consumers.

4) You’ve spoken a lot about how the consumer credit market is “broken.” How do we know the market isn’t working and what can the CFPB do to fix it?

When a family cannot tell the cost in full of a credit card, when it is not possible to determine the risks of a mortgage in advance, and when people can’t directly compare three or four products– apples to apples – to tell which costs the most and which bears the most risk, then the market is broken.

This agency will drive toward making the costs clear, making the risks clear, and making it easy for consumers to compare one product with another. When they can do that, credit markets will work for families.

5) What roles will personal responsibility and financial education play in the consumer credit market once the CFPB is stood up?

I believe in personal responsibility, but it only works when prices and risks are clear up front and not buried in pages and pages of incomprehensible fine print. But, I also believe in American families. When they have better information they will make good decisions and those good decisions will make families stronger and ultimately will make the entire economy stronger.

HUD Policy Statement on Affilated Business Arrangements Unconstitutionally Vague Says Court

In the combined court cases of  Carter vs. Welles-Bowen Realty, Inc and Grezki vs. The Danbury Co, et al a US District Court judge has reviewed HUD’s affiliated business arrangement (aba) Policy Statement 1996-2, in which HUD set forth ten factors to aid in determining whether an aba is a bona fide provider of settlement services under RESPA. The court has determined that the Policy Statement is unconstitutionally vague, concluding that the tests raised serious constitutional concerns by using overly broad terms such as “sufficient,” “substantial,” and “reasonable” without providing guidance as to how to determine the meaning of such terms in the context of the title insurance business.

Here Comes the Big Dog

The Consumer Financial Protection Bureau, the Big Dog of oversight for the Real Estate Industries including mortgage bankers, appraisers, real estate agents and title companies, will soon be put into practice. Under the new law, Tim Geithner will set a “transfer date” when key legal and regulatory authorities shift from such agencies as the FTC, HUD and the Fed to the new consumer protection bureau. In effect, that date sets the beginning of the bureau oversight (with initial funding projected at $500 million a year,) a staff and full set of teeth. By law it must be no later than Jan. 21, 2011. The new agency will assume control of a RESPA, the GFE, HUD-1 and appraisal management among other things. All daunting tasks.With the complications between state laws, federal laws and multiple multiple state and local bureaus, let’s hope this aligns the  process, making it more transparent and less complicated. Well we can hope anyway… I would settle for a Dog that can simply define where his yard ends and our yard starts…

Read More at Lexology.

Read more from Ken Harney at the Chicago Daily Herald.

Title Insurer Held Liable for Title Agent’s Actions

Insurance Journal (05/03/10)

Thurston County (Wash.) Superior Court Judge Paula Casey has ruled that the state insurance commissioner may hold an insurance company liable for the actions of the company’s appointed agent. “If you allow someone to do business on your behalf, it only stands to reason that you can be held responsible for what they do,” said Washington state Insurance Commissioner Mike Kreidler. In an April 23 order, Superior Court Judge Paula Casey ruled that Chicago Title Insurance Co. could be held responsible for illegal inducements offered to solicit title insurance business by one of its appointed agents, Land Title Co. of Kitsap County Inc.   Read full article at Insurance Journal

First American Mortgage Fraud Review

A good article by Frank McKenna vice president of fraud strategy for First American CoreLogic in National Mortgage News.
Reasons why fraud risk is down but reported fraud is higher than ever.
(1) Fraud takes three to five years to fully recognize
(2) Fraud recognition and awareness is up
(3) Potential double counting due to new reporting procedures

Some Loan Servicers Run a Scam

A great article by George Mantor at RisMedia points out problems with some loan servicers. It reads in part:
“Servicing, the collecting and distributing of mortgage payments, is the land of opportunity…Who is in a better position to exploit a defaulting borrower than a person posing as someone who wants to help? And, it’s all part of a scam…”

link to  RisMedia article here

Info On Home Closing

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