Did You Download the May Digital Edition of TitleNews?

May coverWhile the title industry constantly faces a barrage of regulatory challenges, our industry—like many others—is facing an aging workforce.

Download the May digital edition of TitleNews to learn about the importance of providing information about the career opportunities that exist in our great industry. The cover article titled Teach It and They Will Come: Educating Next Generation of Workers Important to Sustain Title Industry’s Future, shares information about ALTA members teaching classes and creating educational material to educate students about the industry’s core competencies.

Let us know what you’re doing to help sustain our industry’s future by sending us an email at communications@alta.org. We may highlight your efforts in an article!

The May edition also includes these items:

  • Compliance is a Journey, Top Ops Hurdles Created by CFPB Disclosures
  • CFPB Releases Compliance Guide for Integrated Mortgage Disclosures
  • Social Media Tips
  • Put It In Writing
  • Member Profile: Bill Ronhaar
  • Ellie Mae Says Closing Delays Not Caused by Malicious Attack
  • New York Adopts Industry-supported Title Agent Licensing Requirement
  • FHA Loans Go Green with E-Closing
  • Market Share Data
  • New Member List
  • A Last Word Column from ALTA President Rob Chapman
  • A Publisher’s Letter from ALTA CEO Michelle Korsmo

Additionally, the digital version includes material not included in the print edition. In this digital edition, you can watch all of the general sessions from ALTA’s 2014 Business Strategies Conference. Please check it out!


Listen to Recorded Webinar on CFPB's Integrated Mortgage Disclosures

More than 600 title professionals attended ALTA's webinar on May 20 titled "New Era In Closings: Prepare Now for the CFPB’s Integrated Mortgage Disclosures."

Speakers included Cynthia Blair of Rogers Townsend & Thomas, Ben Olson of Buckley Sandler, Mary Schuster of op2 and Dan Wold of Old Republic National Title Insurance Co.

The Webinar addressed some of the biggest workflow and process challenges title and settlement agents will face as they transition from today’s HUD-1 and GFE to the Closing Disclosure and Loan Estimate, which become effective Aug. 1, 2015. Who fills out and provides the Closing Disclosure to the homebuyer, the three-day rule, redisclosure, calculating title premiums when policies issued simultaneously, labeling and listing of title fees, are some of the issues the speakers discussed.

In Case You Missed It: ALTA's President Testifies Before Congress

On May 21, ALTA President Rob Chapman testified at the hearing titled “Legislative Proposals to Improve Transparency and Accountability at the Consumer Financial Protection Bureau (CFPB).” The hearing was held before the House Financial Services subcommittee on Financial Institutions and Consumer Credit.

The hearing focused on legislative ideas to improve how the CFPB regulates providers of financial services. One such proposal is H.R. 4383, which would create a small business advisory board at the CFPB. ALTA members asked members of Congress to co-sponsor the bill during the Federal Conference & Lobby Day earlier this month.

“When the Bureau operates in a transparent, open, and iterative manner, the results are generally positive,” Rob told the subcommittee. “However, when the Bureau makes unilateral decisions, rolls out initiatives, rules or processes in a more closed deliberation, the results are far more likely to be problematic.”

In addition, you can read his spoken testimony or check out the longer written testimony.

Rob represented the industry well, walking the committee through our interactions with the Bureau and how more transparent processes led to better outcomes for both our industry and consumers. Specifically, Rob focused on the uncertainty caused by the April 2012 service provider bulletin saying that the lack of outreach left many companies “shooting in the dark as they attempt to invest in systems and processes to protect consumers.” He continued: “Many of our members see different requirements, vetting procedures and are concerned that they will no longer be allowed to compete for business when a mortgage is financed by certain lenders.”

In contrast, “had the Bureau consulted with mortgage originators and the real estate settlement industry, we would all have a better understanding of what is expected from the person conducting the settlement of real estate transactions, and the response to the CFPB bulletin would be less disruptive, more consistent and efficient,” Rob told the committee.

The hearing also allowed us to encourage Congress to pass H.R. 4383, bipartisan legislation sponsored by Rep. Robert Pittenger (R-NC) and Rep. Denny Heck (D-WA) that would create a small business advisory panel at the CFPB. When asked by Rep. Pittenger if ALTA had a good relationship with the CFPB, Chapman said yes, but that it could be “better with the creation of a small business panel.” During one part of the hearing, Rep. Carolyn Maloney (D-NY) showed her support for the bill saying “everyone should have an advisory committee.”

Rob also encouraged the subcommittee to authorize the CFPB to issue advisory opinions. “The Bureau takes its enforcement role seriously and should take its ability to promote good practices just as seriously,” he said. “An advisory opinion provides certainty to those of us who comply with federal consumer financial law in real-life situations. Consumers will see better outcomes if the Bureau spends more time advising people in the industry how to best follow the law.” Finally, Rob suggested that the CFPB encourage public feedback on policy statements, bulletins and other guidance documents. He said public comments ensure documents are useful and understandable to industry and provide a safety valve to reduce unintended consequences.

Please join me in congratulating Rob on a job well done by tweeting to @titlerob. If you have any questions please contact please contact ALTA’s vice president of government and regulatory affairs, Justin Ailes, at justin@alta.org or 202-261-2937.


ALTA CEO Participates in Forum Addressing Mortgage Closing Process

ALTA CEO Michelle Korsmo participated in a public forum held by the Consumer Financial Protection Bureau on Wednesday, April 23 to discuss efforts to improve the mortgage closing process.

Check out Michelle's remarks and answers to a few questions:


The event kicked off with featured remarks by Director Richard Cordray. Housing and Urban Development Secretary Shaun Donovan concluded the event with additional comments.

Along with the forum, the CFPB released a report that finds many consumers are frustrated by the short amount of time they have to review a large stack of complex closing documents when finalizing a mortgage. As part of that research, in January 2014, the Bureau published a Request for Information about the challenges consumers face when closing on a home.

The request asked for input from market participants, consumers, and other stakeholders on ways to encourage the development of a more streamlined, efficient, and educational closing process that would be beneficial to consumers.

The Bureau heard about three major pain points for consumers during the closing process:

  • Not enough time to review: Many consumers are frustrated by the short amount of time they have to look over the closing documents. Often, they do not see the paperwork until they arrive at the closing table. Consumers reported feeling pressure to rush through the paperwork and sign—even when they did not understand the terms.
  • Overwhelming stack of paperwork: When consumers close on a home, they often face stacks of paperwork. Some of the forms are intended to help consumers better understand the costs and risks of their mortgages. Other forms are included by lenders as a result of their legal risk assessments. Remaining forms may fulfill federal, state, and local government requirements. The volume of paperwork varies from lender to lender.
  • Complexity of documents and errors: Most closing documents are full of legalese and technical jargon. The terms and acronyms are unknown to most consumers. In addition to having little time to read through and understand a large stack of paperwork, consumers often complained that they had little help from the others in the room. Consumers also mentioned that they found errors in their closing documents. Those errors often led to delays as closing agents had to redo the entire closing package.

In its report, the CFPB provided this interesting graphic that shows two sample closing packages and which parties were responsible for the documents.

Docs controlled by each party small


E-closings Pilot Project

The CFPB identified electronic closings as one solution to address the pain points outlines in its report. E-closings are already happening in the market today, but adoption is low. There is a lot of misinformation about the legality and feasibility of e-closings.

In addition to its pain points report, the CFPB released guidelines for a pilot project to study e-closings. The pilot project, which will launch later this year, is designed to enable the CFPB to better understand the role that e-closings can play in addressing consumers’ pain points.

Details on how to apply to be a participant in the e-closing pilot project are available in the Broad Agency Announcement.

The CFPB said e-closings can lead to a more knowledgeable consumer experiencing a better, more efficient process. However, e-closings may also present risks to consumers. For example, switching to an electronic process could reduce the amount of time consumers spend reading the closing documents and actively engaging in the process:

Here's graphic that the CFPB included in its report on mortgage closings that depicts an example of a potential end-to-end e-closing process

Sample eclosing process

ALTA members strongly support efforts to identify and alleviate the pain points consumers have experienced during the home closing process. While we are focused on technology and the ability to receive, sign and return, and retain electronic documents, it's important to not 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,” Korsmo said during the panel discussion.  “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.”

ALTA looks forward to continuing to work on this important initiative with Director Cordray and staff at the CFPB on this important consumer initiative.

Because e-losings offers both benefits and risks, the CFPB’s pilot project will evaluate whether electronic closings can increase efficiency, consumer understanding, and minimize surprises at the closing table. The guidelines list the minimum functionalities required of potential participants and highlight some advanced features the CFPB will be looking to test in the pilot. Pilot participants must submit proposals as a partnership between a technology vendor providing an e-closing solution and a lender that has contracted to close loans with that solution. 

The CFPB will work with participants to test many e-closing features, including those that may:

  • Enable consumer understanding: The CFPB plans to test whether educational materials like document summaries, term definitions, or process explanations that can be reviewed prior to the closing table help improve the process for consumers. The Bureau also plans to evaluate whether the order of the documents changes the consumer experience. 
  • Incentivize early document review: The CFPB plans to study the various technologies that would let consumers see the entire package of closing documents ahead of time. Within this pilot, the Bureau would like consumers to have at least three business days prior to closing to review the stack of documents. The Bureau wants to evaluate how early review of the documents may impact the closing process.
  • Facilitate error detection: The CFPB wants to test tools that will help both industry members and consumers spot errors and discrepancies in the closing documents. Such a tool could help consumers easily find the differences between their original estimate and their closing disclosures, preventing last minute surprises.

If interested in appying to be a participant in the e-closing pilot project, check out the Broad Agency Announcement.


How To Show Fees on Closing Disclosure When Buyer and Seller Split a Closing Cost

We received the following question from an ALTA member:

When a seller is paying a portion of a tolerance-related settlement charge, how are the seller and buyer’s obligations shown on the Closing Disclosure Form?

Example: The Loan Estimate for Title – Settlement Agent Fee in the Services You Can Shop For section C is $502.  The consumer selects a provider who is on the creditor’s list and the final charge is $500.  The purchase contract assigns one-half of the charge to each party.

When the buyer and seller agree to split a closing cost in the sales contract, the settlement agent/attorney would split the fee between the buyer's and seller’s columns on page two of the Closing Disclosure.

The detailed breakdown of closing costs are shown on page two of the new Closing Disclosure. This form includes separate columns for costs that will be paid by the buyer, seller or other third party at or before closing.

The person filling out the Closing Disclosure can assign all or part of any one closing cost among those columns. In the instance where the buyer and seller will equally split the settlement agent's fee, the person filling out the Closing Disclosure would list half the fee in the buyers column and half in the sellers column.


Listing Settlement Fees on Integrated Disclosures When Consumer Does Not Shop

As required, we currently provide a Service Providers List, listing only 2 suggested settlement agents and title agents.  We provide the GFE using fees of one of those companies.  If the member decides to let us continue with that company as the settlement and/or title agent, is that company’s fees considered Services You Cannot Shop For or Services You Can Shop For on the new Loan Estimate document?  The lender could always decide to use a different closing or title agent during the processing of the loan.

A settlement fee does not move from the “Services You Can Shop For” category to the “Services You Cannot Shop For” category when the creditor allows the consumer to shop for a service, but the consumer elects not to shop or chooses a provider that is on the creditor’s written list. This distinction is found in the Official Interpretations at 1025.19(e)(ii)-3.

For good faith or tolerance purposes, if the consumer is permitted to shop for a service but elects not to or chooses a provider identified by the creditor, the fee is included in the bucket of costs subject to a 10 percent tolerance. If the consumer elects to shop and chooses a provider not identified by the creditor than the fee would not be subject to any tolerance.

The Interpretations include the following example on the subject: “For example, if, in the disclosures provided pursuant to §§ 1026.19(e)(1)(i) and 1026.37(f)(3) [the Loan Estimate], a creditor discloses an estimated fee for an unaffiliated settlement agent and permits the consumer to shop for that service, but the consumer either does not choose a provider, or chooses a provider identified by the creditor on the written list provided pursuant to § 1026.19(e)(1)(vi)(C), then the estimated settlement agent fee is included with the fees that may, in aggregate, increase by no more than 10 percent for the purposes of § 1026.19(e)(3)(ii).”

When allowing a consumer to shop for a settlement service provider, the creditor must identify to the consumer the service for which they are permitted to shop and provide a written list of potential providers. 12 CFR 1026.19(e)(1)(vi). The written list must identify at least one available provider of that service and include a clear statement that the consumer may choose a different provider for that service.

Further, the list must include sufficient information for the consumer to contact an identified provider such as the name under which the provider does business and the provider's address and telephone number. Lastly, a creditor does not allow a consumer to shop when the written list consists of only settlement service providers that are no longer in business or that do not provide services where the consumer or property is located.

See form H-27 of appendix H to this part for a model list, which begins on page 1,561 of the final rule.


What Document Should Be Used for Sellers After August 2015?

Several people have asked what document should be used as the settlement statement or Closing Disclosure for sellers after August 2015, when the CFPB’s final rule for integrated mortgage disclosures goes into effect.

Because the Closing Disclosure includes non-public information about the buyer’s loan, such as interest the rate, there have been concerns about how the final rule affects privacy components of the Gramm-Leach-Bliley Act and ALTA’s Best Practices.

When the rule goes into effect Aug. 1, 2015, sellers will also  receive a copy of the Closing Disclosure. Under the rule, settlement agents will provide the seller with the Closing Disclosure reflecting the terms of the seller’s transaction. Due to privacy concerns, the Bureau will allow settlement agents to provide buyers and sellers with separate versions of the Closing Disclosure only showing information relevant to their transaction. These seller and buyer specific forms would be completed in accordance with 12 CFR § 1026.38.

To help illustrate the point, the Bureau produced a sample of a seller only Closing Disclosure at appendix H-25(I), which can be found on page 1,545 of the final rule. As a side note, if the transaction is an all cash sale or a business or investment sale not subject to RESPA, then the buyer, seller and settlement agent are free to agree to their choice of forms or state mandated forms as required.

As a side note, if the transaction is an all-cash sale or a business or investment sale not subject to RESPA, then the buyer, seller and settlement agent are free to agree to their choice of forms or state-mandated forms as required. While some states have laws requiring the use of a promulgated form in cash transactions, in general the HUD-1, Closing Disclosure or any other settlement statement can be used in cash transactions.


A Great Story About Title Insurance in Honor of Presidents' Day

I hope everyone had a great Presidents’ Day, or as it is legally known, Washington’s Birthday. We have come to regard the holiday as a celebration of all of our presidents and before we get into the goings-on at ALTA, please indulge me in this industry-relevant story about our 13th president, Millard Fillmore.

President Fillmore was born January 7, 1800, in Cayuga Country, New York. Just a year before his birth, the future president’s father, Nathaniel, and uncle, Calvin, purchased a farm in Locke Township sight unseen. The land was part of the central New York military tract set aside for sale to soldiers who had fought in the Revolutionary War. Faulty surveys, fraud and ignorance left title to land in the military tract uncertain, prompting the state of New York to send a team of commissioners to review and settle all land titles in the area. Unfortunately for the Fillmore brothers, they were unable to defend their title against the commissioners’ findings.

Following the complete failure of their title, the Fillmores took up a perpetual lease for a farm in Sempronius, NY. However, the poor soil, forest cover and rugged terrain of the plot led to rough times for the Fillmores. This experience led Nathaniel Fillmore to push his children into professions other than farming. For his son Millard (a good student and avid reader), Nathaniel secured a clerkship studying law with Judge Walter Wood. Wood was the richest person in the country, having earned his money and reputation on title litigation. It was this experience that led the future president to become an attorney.

We can assume that his experience clerking for Judge Wood led to one of President Fillmore’s most astute and important acts, promoting a law to perfect title in the new state of California. In 1850, Fillmore became president on the passing of President Zachary Taylor. In his first State of the Union, Fillmore addressed one of the most pressing issues of the day, the status of land ownership in the newly acquired states of California, Texas and New Mexico. In that message to Congress, Fillmore stated:

The uncertainty which exists in regard to the validity of land titles in California is a subject which demands your early consideration. Large bodies of land in that State are claimed under grants said to have been made by authority of the Spanish and Mexican governments. Many of these have not been perfected, others have been revoked, and some are believed to be fraudulent. But until they shall have been judicially investigated they will continue to retard the settlement and improvement of the country. I therefore respectfully recommend that provision be made by law for the appointment of commissioners to examine all such claims with a view to their final adjustment.

This is a great statement about what the land title industry does every day and how that work is important to our country and the free flow of capital. Can you imagine if there was an entire paragraph in a modern day State of the Union about the importance of clear title? Join me in celebrating the achievements of an oft overlooked President Millard Fillmore.


When Does the Three-day Rule Start to Run?

According to the Consumer Financial Protection Bureau’s final rule for integrated mortgage disclosures, the borrower must RECEIVE their Closing Disclosure at least three business days prior to the date of consummation of the transaction. This means that if the closing is set for Thursday, the Closing Disclosure can be hand delivered on Monday. You could also deliver the disclosure by courier or other shipping or postal service so long as you get a signature from the borrower showing receipt on Monday. If a company does not use a service that provides evidence that the disclosure was received on Monday (ie: US Postal Service first class mail), then it must send the disclosure by the prior Thursday.

Some quick definitions can be helpful when understanding this rule. First, the starting point for determining when the three-day period starts is the day of consummation. Consummation is the day the consumer becomes contractually obligated on the loan (i.e., the day they sign the note). This is typically the same day as closing (12 C.F.R. §§ 1026.2(a)(13) & 1026.38(a)(3)(ii)). Once you have the right starting point then you need to count backwards. The three-day rule requires the counting of “business days,” which are “a day on which the creditor’s offices are open to the public for substantially all of its business functions.” (12 C.F.R. § 1026.2(a)(6)). It is not a 72-hour requirement, but rather a day requirement so you do not need to know the time that closing will take place.

Lastly, while the examples the CFPB provides in the rule all focus on physical delivery of the disclosure, electronic delivery is allowed in accordance with the E-SIGN or Uniform Electronic Transaction Act laws. The timing requirements are the same as for physical delivery and would require obtaining some evidence of receipt (i.e., an email confirmation, system log or other indicia) or complying with the mailbox rule for presuming receipt three days after placing the documents in the mail.

For more information about the integrated disclosures, go to www.alta.org/cfpb.


Check Out the Digital Registration Brochure for the 2014 Business Strategies Conference

Want to learn about the new integrated mortgage disclosures that will replace the HUD-1 and GFE starting August 2015? Need help implementing Best Practices? Looking to fortify your business against identify fraud?  

We've got a great lineup of informative sessions to address these questions and a whole lot more at this year’s Business Strategies Conference, March 12-14 at the Omni Nashville Hotel in Nashville, Tenn.

The Registration Brochure for the conference should be arriving in your mailbox and contains all the information you need to know about the schedule of events, conference hotel, travel accommodations and registration rates.  Reg_brochure

If you don't want to wait for snail mail, you can check out the digital version of the Registration Brochure.

Here's a glance at our featured general sessions:

  • What Does the CFPB Mortgage Disclosure Rule Mean to You?
  • Defend Your Business Against Identity Fraud—Recognize Fake IDs
  • You Can Handle the Truth About Your NPI
  • The Age of Wisdom and Foolishness: Navigating Conflicting IT Currents

A special closing luncheon will be held at the Country Music Hall of Fame & Museum, where you will be able to listen to local music and experience the history of America’s music.

As always, ALTA has a full slate of professional development sessions aimed at giving you a competitive advantage. The sessions will address these key areas:

  • Best Practices
  • Operations
  • Sales & Marketing
  • Legal & Regulatory Compliance

Check out the brochure for descriptions on all 16 professional development sessions. CE credits are pending approval in 19 states and CLE credits are pending in 27 states, so you can network, learn and get valuable continuing education credits at the same time.

Register by Feb. 18 and save! Register online and save an additional $50. As an added bonus, register for the Business Strategies Conference and attend the Agents and Abstracters Forum on March 12 for half price. Additionally, ALTA is offering its first Social Media Summit (SMS) during the afternoon of March 12. The Registration Brochure includes information on how to take advantage of special inauguration pricing for the SMS.

Learn about fun things to do in Nashville.

Hotel Block Sold Out

ALTA’s room block at the Omni is sold out for the nights of March 11 and 12. You can call the hotel at 1-800-843-6664 to get on the waiting list. Additionally, there are hotel options within walking distance: