Changes on the Way Courtesy of Dodd-Frank

By  Stephen L. Vinson, Jr., Esq.
Attorney at Law

The Consumer Financial Protection Bureau (CFPB) was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in an attempt to govern transactions dealing with residential real estate lending, among other things. The CFPB issued a 1,099 page rule to ‘simplify’ the loan closing experience for borrowers. Like Dodd Frank, in general, this Rule has broad and deep implications that will affect everyone in our industry. Our office has been heavily involved in commenting on the Rule in the hopes that we can make an impact on the Rule and get the CFPB to adopt some of our recommended changes that we hope will curb the negative impact of the rule on the consumer (our ultimate client). The Rule is comprehensive and we will try to keep you informed as to its progress as many aspects of the Rule affect all of our partners….real estate agents, lenders, buyers and sellers, among others. Here are just a couple of the changes. First, the HUD-1 closing statement as we know it will be history and a new ‘Closing Disclosure’ will replace it. As most of you know the HUD-1 was just changed by the government a couple of years ago and, yet, they feel the need to change it again. We understand the need for regulation but we are concerned about over-regulation. There is another proposed form which is called the ‘Loan Estimate’ which will replace the Good Faith Estimate given by lenders. To coincide with these new forms, there will be a requirement that the ‘Closing Disclosure’ (f/k/a the HUD-1) will need to prepared in final form three days prior to a closing! There are additional issues relating to this that we will address in future bulletins. But, for now, we just want you to know that if the figures change on the Closing Disclosure within the three days, a new three day period will have to commence from the date the changes are made. Most of you know that the closing statement goes through changes right up to the closing time. For example, the pre-closing walk through often results in an adjustment for repairs. We are lobbying to do away with this portion of the rule and/or in the alternative, to limit same by calling for certain changes to be allowed without having to extend the three day period. This is just one small example of how the CFPB, in its attempt to regulate (overly regulate in our opinion) the banks in regard to their lending practices, will impact all of us in the industry. Here, at Universal Title, we are keeping abreast of the coming changes and educating ourselves so that when the time comes, we can educate and assist our clients and colleagues. In the coming weeks, we will update you on key elements of the rule and we will do our best to keep our friends as much in the know as possible.

 Title Policy Surcharge:

In the near future, a surcharge of twenty eight cents ($0.28) will be due for each title insurance policy issued in Florida. This surcharge was instituted by the Florida Office of Insurance Regulation (OIR) and was authorized by Section 631.401, Florida Statutes. The surcharge is intended to provide protection for insureds of title insurers that have been placed in receivership and who are otherwise unable to cover their claims. It is anticipated that the surcharge will be in place for one year. The charge will be reflected in the 1300 series (additional charges) of the HUD-1 closing statement. The surcharge is a component of legislation that protects Florida citizens from a complete loss of the very important coverages provided by title insurance policies. We know it is only $0.28 but we want our clients to be informed what it is so they can explain it their clients. 

As the winds of change impact our industry once again, rest assured that our team is on top of the changes and will be prepared to work under the new regulations and advise our friends and clients regarding same. In future weeks, we will provide you with more details on the new Rule as well as the proposed new documents. 

Don’t forget our no up-front fee short sale program. We continue to assist countless clients in successful short sale transactions, saving them hundreds of thousands of dollars. REMEMBER that the Mortgage Forgiveness Debt Relief Act is scheduled to expire at the end of the year! As you may know this act provides tax relief to those who qualify lessening the burden on our clients who are short selling their property. I encourage everyone to contact their Congressman and let them know how important it is that this Act be extended.