The CFPB changes are here but don’t fret. These regulations are here to help the consumer. Even though these new regulations appear to make things more difficult for title agencies, lenders and realtors, these changes will make everything more comprehensive for and protect the consumer.
Debbie Olsen, who has spent 23 years at an Escrow desk, is the Vice President of Escrow Administration at Clear Title Agency of Arizona.
Olsen said she loves learning about new and updated materials and information that ensures the best practices are being implemented at Clear Title and all of those involved, which is why she is making it her mission to inform realtors and others on the CFPB changes.
“CFPB is a consumer financial institutions bureau,” Olsen said. “It is a regulatory agency that was established after several major companies, such as AIG and Lehman Brothers, went under in 2008.”
CFPB was then established in July 2011 and oversees all consumer financial products and services, she said. Not only does it protect the consumer, but it makes things easier for the consumer to comprehend.
“I think change is good,” Olsen said. “These changes are keeping up with what needs to be done and requires lenders to be clearer and provide information that is easier for consumers to understand.”
According to Olsen, there are new rules that could affect the realtor and lender, such as: cover appraisals, high cost mortgages, homeownership counseling, ability to repay/qualified mortgage, loan originator compensation, escrow requirements for truth and lending and mortgage servicing rules.
The biggest change everyone faces in this situation, however, is the removal of the HUD-1 (Settlement Statement), GFE (Good Faith Estimate) and TIL (Truth-In Lending Disclosure), she said.
“The HUD-1 will be replaced with Closing Disclosure Form or CDF, and the GFE in now going to be the Loan Estimate,” Olsen said.
Other changes she recommends lenders, realtors and title companies to familiarize themselves with are: the Lender or Title Company is to deliver the CDF to the borrower, the limits to Closing Cost increases and APR will now change to include more fees—for instance, normal Title and Escrow Charges.
Another change that could cause delays in closings, she said. This change is the 3 Day Rule where the borrower needs to see final figures, and if they are off by more than $100 a re-disclosure has to take place.
Even though these regulations are not required until Aug. 1, 2015, Olsen said that Clear Title Agency of Arizona is adopting them now.
“It is in everyone’s best interest to be compliant with these new regulations,” Olsen said.
It is essential for lenders to be aware of title agencies that do comply with all of the CFPB regulations, she said. Because if a lender does business with a title company that doesn’t comply with the new rules, it will result in transaction mistakes, and the blame will fall on the lender and not the title company.
It will take time for everyone to acclimate on how a Real Estate closing is done once all of these new rules are in place, but some of them should already be done by Escrow and Title Partners now, such as the Clean Desk Policy, Olsen said.
Title companies have to adhere to other rules as well, such as: paperless transactions, background checks on lenders and to complete paperwork in a timely manner, she said.
“Realtors, lenders and consumers can depend on Clear Title Agency to provide them with a quality experience throughout the real estate transaction process,” Olsen said.
For more information you can visit CFPB’s website at http://www.consumerfinance.gov/.