Consumer Financial Protection Bureau (CFPB) mortgage disclosure requirements would be revised to better represent true consumer costs, including the cost of title insurance, under legislation introduced by U.S. Rep. French Hill (R-AR) on Thursday.
“Consumers deserve to know the costs of their title insurance premiums when they purchase a home,” Hill said.
Currently, the CFPB’s Know Before You Owe mortgage disclosure rule requires lenders to provide mortgage forms to consumers to clarify the closing process. Those forms, however, don’t reflect accurate title insurance premiums in most states.
The Know Before You Owe rule is also known as the TRID (TILA-RESPA Integrated Disclosure) mortgage disclosure rule with TRID being comprised of the acronyms of TILA for the Truth-in-Lending Act and RESPA for the Real Estate Settlement Procedures Act.
Under the TRID Improvement Act of 2017, mortgage providers could include a discounted rate for the simultaneous purchase of lenders and owners title insurance, known as “simultaneous issue,” in mortgage disclosure forms provided to consumers.
“As TRID has become a massive, complex rule, it is hindering financial institutions’ ability to share accurate information to consumers during the mortgage closing process,” Hill said.
Although simultaneous issue provides a discount on owner’s title insurance rates, CFPB has declined to revise mortgage form disclosure guidelines to reflect that.
“This legislation seeks to correct this error by ensuring that consumers know the exact cost of their title insurance — not the number reported as one price on a lending estimate and another price on a closing document,” Hill said.
Hill introduced the legislation with U.S. Rep. Ruben Kihuen (D-NV).