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Wyatt Bell's Blog

CFPB - Round 5 - New TIL/GFE Form Prototypes
by Wyatt Bell | 2011/10/19 |

The CFPB has issued the 5th round of proposed changes to the TIL/GFE combined format. These may be viewed at CFPB website: Know Before You Owe

Wyatt Bell's Blog ::

The new prototypes compare a fixed-rate (Pinyon Bank) and an adjustable-rate (Yucca Bank) loan:

Pinyon Bank - Fixed Rate

Yucca Bank - Adjustable Rate

These samples appear to have some itemization. This has been a real roller coaster! Earlier samples from CFPB show itemization and some don't! One can only wonder - what gives?

Could it be that CFPB will allow itemization based upon jurisdictional differences? This angle might also come into play considering loan types such as VA where the Administrator ruled that certain itemizations must appear.

The description "optional" has returned regarding the Owner(s) Title Insurance Premium. It may be that the word "optional" will be shown on refinance transactions as opposed to sales/transfers where the estate is being created in new parties.

According to a press report from the ALTA the CFPB will have a new proposed HUD-1/1A before Thanksgiving, 2011. 





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248 words | 2130 views | 2 comments | log in or register to post a comment


BUT AT WHAT COST TO THE INDUSTRY

   Wyatt

I very much appreciate all of the effort you are putting into to keeping us informed about the proposed new rules relating to the revised (again) HUD and GFE.

In the last go round it cost me, a very small title agent, no less than 10K to be able to produce the new HUD and GFE.  Between having to upgrade my computers to enable using the new software and the cost of training my staff it was a monetary nightmare.  

And now, here we are again some 18 months later and there continue to be "tweeks" discussed. I fear that I will have to start socking away some ready funds to enable me to again do upgrades to my system and to again send my staff to training so that we are able to understand and be in complaince with any new rules.

At the end of the day as an actual fact, it makes very little difference to the consumer what is stated on these "new and improved" forms.  They really only ever want to know the bottom line.  Not how that bottom line was derived, not to whom the monies were paid, etc. 

As far as making the owner's title insurance an "optional" line item, I can state with some certainty, based on personal experience, if you tell a consumer in a writing that something is an "option" they likely think they don't need it.  That is by my defination, a misrpresentation to the consumer. As I always say to my clients, if title insurance were in fact an "option" why do you supposed that your lender REQUIRES it. 

It's time for government to talk to those of us who actually conduct these closings. I am most certain that they will find, across the board, that the original HUD was far more clear to the average consumer, it made better sense to most in the industry AND most importantly, it gave FULL DISCLOSURE to the consumer in a line by line apples v. apples format.  

While the industry has learned to use the current "new" HUD/GFE it is not being used in the manner in which the government had originally anticipated. In fact, very few in our industry can actually explain the "roll up" lines, what fees are included, what fees are not, etc. 

If I sound a little frustrated, WELL I AM.

 
by CHARLENE PERRY | 2011/10/19 | log in or register to post a reply

Common Sense -- Please!!!

Charlene,


I think you've hit the center issue with a laser! - "the original HUD was far more clear to the average consumer, it made better sense to most in the industry AND most importantly, it gave FULL DISCLOSURE to the consumer in a line by line apples v. apples format".

HUD's summary for the new rule was as follows:

SUMMARY: This final rule amends HUD’s regulations to further RESPA’s purposes by requiring more timely and effective disclosures related to mortgage settlement costs for federally related mortgage loans to consumers. The changes made by this final rule are designed to protect consumers from unnecessarily high settlement costs ... make it easier to use for shopping among settlement service providers ... provide more accurate estimates of costs of settlement services ... improve disclosure of yield spread premiums ... and strengthen the prohibition against requiring the use of affiliated businesses.

This is a little off the subject but I'm having greater difficulty accepting that government agencies such as HUD can basically legislate at their whim. There's no vote or representation whenever this occurs and the idea that an appointed agency-head can somehow change the direction of an agency which has been stratified by bureaucrats over decades with their perceptive taints disallows the recourse of a vote - only through a lawsuit can rules be challenged (or the agency agrees to a change or congressional override!).

I also understand that Congress would be hard pressed to write every little rule-making nuance and federal agencies such as HUD are necessary in that regards.

But it would seem to me we should have the congress vote on the body of rules which come from the agencies. In other words, instead of the agency having carte blanche to implement these rules interpreting the congressional legislation a majority congressional vote would be required prior to their adoption.

I've enjoyed the debates between Justice Scalia and Justice Breyer regarding whether the Constitution should be considered a static framework limiting government (Scalia) or whether it is a living breathing document with alternative interpretations as time goes on (Breyer).

This debate seems to me to follow the rule-making authority of agencies such as HUD. The legislation is passed by Congress and the agency then writes the rules interpreting that legislation which become part of the Code of Federal Regulations. As it currently exists the agency can deem circumstances such that new and amended rules and promulgations are implemented to further the original intent of congress. And this may be OK but the only recourse to some agency rule is a lengthy lawsuit!

If we just had the simple congressional vote as to the body of rules proposed by the agency I think a lot of this ineffective and burdensome rule-making nonsense would be eliminated.

I don't have the reference at hand but I do recall that settlement costs have increased since implementation of the new RESPA rule. And why wouldn't they? Just the amount of paper has increased 2-3 fold. What was once a 2 or 3 page HUD-1 statement has now become an 8-10 page document with all schedules.

When you write that you spent "no less than 10k" in upgrades and training just to accommodate the changes reminds me of Frederic Bastiat’s broken window fallacy. He was showing how this fallacy "regulates the greater part of our economical institutions".

The argument supposes commerce is increased when someone breaks a window. Production of glass ensues and the glazier comes to change the window and receive his compensation. He can buy a six-pack on the way home.

But on the other side the shopkeeper has less money in his pocket. So it is probably that the shopkeeper will spend less because the unexpected event has lessened his pile of money.

There's been no gain to the total commerce nor has any greater efficiency been achieved. It's just a transfer.

This HUD rule is akin. You have less money from complying and following a rule which has resulted in greater inefficiency and cost! Settlement cost have not gone down for consumers! And it is costing you more money to operate as a result of keeping up with the rule!

This screams for some common sense! It is this slow denigration which is going to kill America!!

But I have to tell you there's a joke in a question asked by a customer upgrading software, - "And who says government doesn't create jobs?!?"

 

 

 
by Wyatt Bell | 2011/10/19 | log in or register to post a reply
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