Since rolling out the TILA-RESPA Integrated Disclosures (TRID) rule, the Consumer Financial Protection Bureau has said the goal of the new mortgage disclosures was to make the process of getting a mortgage is easier and to help consumers understand the key features, costs and risks of a loan.
When the CFPB proposed its amendments to the rule in July, bureau Director Richard Cordray reinforced this message saying the “rules are designed to make sure consumers have the information they need, in a form they can easily understand and use, before making the decision.”
Unfortunately, results of an online consumer survey conducted by ALTA over the summer reveal the CFPB’s mortgage disclosures are not meeting this objective and working as intended. In July, ALTA partnered with Survata, a leading national research firm that works with Fortune 500 companies on obtaining consumer opinions, to collect data on consumer’s experience around shopping for title insurance and the TRID disclosures. Those surveyed included 2,000 current (93 percent) and prospective homeowners (7 percent)—those who planned to purchase a home in the next year. Of the current homeowners who were surveyed, more than 61 percent were owners for more than a decade, while 18 percent were in their home between five and 10 years. Newer homeowners (less than five years) made up 20 percent of those surveyed.
The survey posed 14 questions about preferences for learning about title insurance. During the survey, consumers were shown compliant Closing Disclosures, which displayed title insurance premiums according to the CFPB's rule. Respondents were then informed of the actual cost of title insurance. The survey measured their reactions.
The data showed that a plurality of the people surveyed find the rule confusing and deceptive. After showing the CFPB’s disclosures and presented with the true cost of title insurance, the most popular response from consumers at 31 percent was “I’m confused.” While this confusion is disconcerting, it is not the most troubling finding from the survey. The most disconcerting data point is that 10 percent of consumers felt that they were being taken advantage of by not being told the true cost of title insurance on the disclosure.
“Frankly, this is 10 percent too many,” said Michelle Korsmo, ALTA’s chief executive officer. “The purpose of the CFPB is to protect consumers by ensuring markets are fair, transparent and competitive. However, the bureau’s decision to require the inaccurate disclosure of title premiums is having the opposite effect and is not providing consumers understandable information to help them make responsible decisions about financial transactions.”
Meanwhile, roughly 27 percent of respondents felt that the CFPB disclosure was positive because it was good to know the marginal cost of buying an owner's policy.
ALTA has informed the CFPB that amending the Official Interpretations for §1026.37(f)(2), §1026.37(g)(4) and §1026.38(g)(4) is the best way to correct the rule and allow title insurance fees to be disclosed the same way as every other fee.
The survey also asked consumers to rank the factors they care about when trying to understand their transaction. Topping the results was getting a detailed breakdown of all the costs for a service, followed by the ability to easily compare estimates to final figures and comparing the disclosure to the actual costs. At the bottom of the rankings is providing marginal cost of optional products and seeing bottom-line amounts like cash-to-close.
“These findings show that consumers would find more value in the mortgage disclosures if they showed accurate costs for title insurance instead of the incremental costs,” Korsmo said.
Additionally, survey results reinforced the continued need to educate consumers about the benefits of title insurance earlier in the transaction. More than half of those surveyed indicated they either received information about title insurance at the closing table or didn’t know about the product.
“ALTA members must remain committed to educating consumers about how title insurance provides peace of mind by protecting their property rights,” Korsmo said. “An equal commitment from the Bureau is needed to ensure that confusion over the price of title insurance does not undercut these efforts.”
ALTA created the Homebuyer Guide to help members easily communicate the benefit of owner’s title insurance. The Homebuyer Guide includes more than 60 marketing resources available for direct-to-consumer communication. These materials are available exclusively to members.
In this post, we focus on how you can use the various marketing one-pagers that are available. These can be given to consumers and business partners:
When to Use: Closing agents can use this with the “Why Every Homebuyer Needs Owner’s Title Insurance” PowerPoint. It can also be displayed at the closing office.
When to Use: This one-pager can be displayed at the closing or real estate office, or used in a homebuyer meeting at any point in the process. The earlier in the purchasing process, the better.
When to Use: This one-pager can be displayed in the closing office or real estate office, and be provided as a value-added resource when meeting with homebuyers in person.
When to Use: This one-pager can be shared at team trainings or one-on-one meetings.
When to Use: Title professionals should share this with their real estate agent partners, or real estate agents can share it with their colleagues to better equip them to talk about owner’s title insurance with homebuyer clients.
Click here to view all the material available in the Homebuyer Guide.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) verbally provided on Sept. 7 answers to frequently asked questions by title companies on compliance with the Geographic Targeting Order (GTO). These questions were selected from those asked during webinars hosted by ALTA and the California, New York and Texas land title associations. For questions about specific transactions, ALTA and FinCEN recommend calling the FinCEN Resource Center at 800-767-2825. Most transaction specific questions are answered within one to two business days.
Q – Multiple buyers. If a purchase is being made by an individual buyer and a corporate entity as tenants in common and would otherwise meet the GTO thresholds is it a covered transaction? Does this answer change if the legal entities portion of the equity in the real estate is less than the reporting threshold?
A – Yes it is a covered transaction. The GTO defines a covered transaction as one in which a legal entity is involved in any manner as a purchaser or real estate in a covered location at or above the covered price. This is true even if the legal entity will own a minority or de minimis stake in the property.
Q – Business Trusts. Is a business trust considered legal entities for purposes of the GTO?
A – No. All trusts, no matter the purpose, are outside the definition of a legal entity under the GTO. The type of trustee, individual or corporate, does not change this result.
Q - Refunded checks/deposits. If an entity pays their earnest money in a business check but this check is not deposited and later returned to the purchaser who then wires the entirety of the purchase price at closing is this a covered transaction?
A – Yes. If a one of the covered payment methods (checks, money orders, cash) is used as part of the transaction by any of the parties then it is covered by the GTO. This includes situations where those funds are later refunded and the entirety of the purchase price is wired.
Q - 1031 exchanges. Does the GTO cover residential properties that are obtained as part of a 1031?
A – Yes. The mere fact it’s a 1031 transaction does not impact the determination on whether a transaction is covered by the GTO.
Q – Vacant lots. Does the GTO cover the purchase of a vacant lot? What if it is going to be used in the construction of a home?
A – It depends. The answer hinges on whether the vacant land would be considered residential under the GTO definition. A good rule of thumb is to consider whether the sale would be covered by TILA or RESPA (requiring the issuance of TRID forms) if it was being purchased using a loan. As a reminder, if you have a question about a specific transaction, it is best to reach out to FinCEN directly for guidance.
Click here for more information about the GTOs.
If you have additional questions about FinCEN and the GTO, you may email Steve Gottheim, ALTA’s senior counsel.
By Zafar Khan
In the past, for individuals and small businesses, cybersecurity was important to mitigate the inconvenience of spam, viruses that required restoring back-ups of corrupt files, and letters to credit bureaus to clear up identity theft issues. While painful, the cost of these was generally in the hundreds of dollars and perhaps a few hours of inconvenience.
Today, we see a convergence of trends that is changing the dynamics of cyber security for those in the integrated real estate sector.
For individuals and small businesses, today’s challenge is to maintain the simplicity of digital communications and transactions, while increasing the protection against these new cyber risks. Armed with just a little more knowledge, users can reduce their exposure to today’s “hacker gold rush.”
Zafar Khan is CEO of RPost. He can be reached at email@example.com. Khan will speak more in depth about this topic during a session titled "Uncrypting the Encryption Options" at ALTA's Annual Convention. Click here to register.
By Kate Steineman
If you are like me, you have been glued to the television watching the summer Olympics. The talent that those athletes have is amazing to behold. Each of them depends on a score to understand where they stand in their given sport and what it would take for them to win the gold.
In today’s regulatory environment, we all want to be gold medal agents. There are increasing requirements of us from your lenders, and they could vary from lender to lender. Knowing those expectations, and how they measure your performance, is critical for you to “go for the gold”.
Please join Kate Steineman and me at our Notable session; “The Inside Track to Acing Your Final Exam with Your Lenders” at the ALTA Annual Convention in October to discuss what lenders are measuring and what criteria is being included in their scorecards. Come ready for an interactive session and bring your questions regarding the scorecard/evaluation process.
Kate Steineman is Vice President and Business Liaison Manager at Wells Fargo Home Mortgage. She can be reached at firstname.lastname@example.org. Steineman and Jack Rattikin III, President and CEO at Rattikin Title Company, will speak more in depth about this topic during a session titled "The Inside Track to Acing your Final Exam with your Lenders" at ALTA's Annual Convention. Click here to register.
By Blaise Wabo
Demonstrating compliance with the ALTA Best Practices framework is a challenging endeavor for many title insurance and settlement companies. There are many factors to consider when choosing an outside company to partner with; from cost, to process and methodology, to a company’s experience, and more.
I will discuss the top five things you must consider when choosing a third party assessment provider to ensure that your organization finds the right provider for your needs. By heeding our advice when selecting a third party assessment provider, your organization will be able to demonstrate compliance with ease!
Blaise Wabo is a Managing Consultant for A-LIGN. Wabo will speak more in depth about this topic during a session titled "The Top 5 Things to Consider When Choosing a 3rd Party Assessment Provider" during ALTA's Annual Convention. Click here to register.
By Ashley Cook
How is our industry losing billions of dollars a year from cybersecurity after spending billions of dollars on increasing IT security and protocols?
The Answer: Realtors and Buyers. While brokers and Realtors are beginning to embrace the importance of IT security, the buyers will always be the wildcard. We can’t force the buyer to use encrypted email or even sit in the front seat of the transaction (i.e., be engaged). After all, most buyers don’t even recall where they closed.
Learn how mobile technology is bridging this gap. What gap? The gap between the true beginning of the transaction verses the beginning of the transaction from the view of the settlement service provider. In other words, THE TRANSACTION BEGINS WITH THE REALTORS AND CONSUMERS, which is days before the title company receives the order.
Ashley Cook is CEO/Founder of ZOCCAM. She can be reached at email@example.com. Cook will speak more in depth about this topic during a session titled "Drive Success, Not Checks with Mobile Deposits" during ALTA's Annual Convention. Click here to register.
By Leslie Wyatt
Ever been to a party and have someone come up to you and ask “So what do you do?” Sure you have, and you have also seen their eyes gloss over when you answer “I am in the title industry.” “The Title industry? What’s that?” they ask. When you try and explain further what exactly it is that you do and what title insurance is you realize quickly that you have lost them!
Let’s be honest even some people in the title industry don’t fully understand what owner’s title insurance is and how it works. Think about it. This is likely the largest transaction that a consumer will ever make and they don’t understand how important it is for them to have owner’s title insurance!
There are so many misconceptions out there about title insurance. As an industry, it is our job to educate not only the consumer but all the parties in the closing transaction on the importance of title insurance, what it does and how it works.
Come join the fun and maybe even participate! Learn some creative ways to train your staff and educate homebuyers on the benefits of owner’s title insurance. Hear what consumers, real estate agents and lenders think about title insurance, and learn how to help them better understand our business.
Leslie Wyatt is Director of Industry Relations at SoftPro Corporation. She can be reached at firstname.lastname@example.org. Wyatt and Bernadette Cuevas, Managing Director at First Nationwide Title Agency, LLC, and Lisa Steele, EVP at Mother Lode Holding Company, will speak more in depth about this topic during a session titled "Consumers Say the Darndest Things: A Game Show" at ALTA's Annual Convention. Click here to register.
By Debra Gentry
In 1900, the Good Housekeeping Research Institute (GHRI) was founded to test various household devices and products. By 1909, the Good Housekeeping magazine had established a unique “Seal of Approval” process whereby all advertisers within the magazine who passed the GHRI quality review were given special status by the GHRI with a unique label affixed to their advertisement. The seal is meaningful even today—both to the millions of consumers who want assurance they are purchasing a tested product and to the manufacturers who seek association with a widely-recognized, independent review.
As the settlement industry begins to market its services to homebuyers, real estate agents and lenders, it is increasingly important the best companies differentiate themselves from their competitors. Being compliant to ALTA’s Best Practices provides you with the title industry’s seal of approval. And, since there are varying degrees of compliance in the marketplace, it is of critical importance that you are able to showcase how and why your offering is different. Otherwise, your messaging will just become part of the noise.
Understanding how the compliance seal of approval can be used to your advantage when promoting title services to the marketplace will provide a marketable point of difference when growing your organization. How should you use social media? Do you need to advertise on radio or TV? What other mediums are there to promote your services?
In this session, we will have open discussion on the different ideas for how best to market your organization. We will also discuss ways to make your title company stand out in a crowded field.
Debra Gentry is Director of ALTA Best Practices Group at Pershing Yoakley & Associates, PC. She can be reached at email@example.com. Gentry will speak more in depth about this topic during a session titled "Compliance Is One of the Best Ways to Market Your Business" during ALTA's Annual Convention. Click here to register.
By Frank Pellegrini
The financial and tech world is abuzz with the potential of blockchain technology. This technology, which underpins the bitcoin “currency,” is being developed for use in an array of financial transactions, including potentially the recording of property records.
What exactly is blockchain? Here’s the definition from Wikipedia (consider the source, of course):
“A blockchain is a distributed database that maintains a continuously-growing list of data records secured from tampering and revision.”
Confused? So are we.
While this new technology clearly has the potential to change the way we record real estate transactions, many questions remain, especially for us novices. During this exciting session we will attempt to clear up some of that confusion by exploring at length a number of questions about blockchain, including:
Come listen to a discussion about this new technology.
Pellegrini, CEO of Prairie Title Services, along with Mark Ladd, VP-Regulatory & Industry Affairs at Simplifile, and Wesley Miller, CEO of ATS Secured, will speak more in depth about this topic during a session titled "What’s all the Hype with Blockchain?” at ALTA's Annual Convention. Click here to register.