'eClosings study': Advanced document delivery empowers homebuyers, improves grasp of closing process; technology helps

'eClosings study': Advanced document delivery empowers homebuyers, improves grasp of closing process; technology helps

HOMEBUYERS WHO RECEIVE THEIR CLOSING DOCUMENTS well in advance of their closing date are more likely to report higher levels of understanding, efficiency and empowerment regarding the real estate closing process, according to a study conducted by the Consumer Financial Protection Bureau.

CFPB Director Richard Cordray delivered prepared remarks during a forum about the pilot project known as "eClosings."

"Though the sample for this pilot was somewhat limited, the correlation between eClosings and the positive outcomes we observed is encouraging and consistent with our expectations," Cordray said.

The program seeks to assuage three primary gripes consumers have about the real estate closing process: They don't have enough time to review documents; they are overwhelmed by the sheer volume of closing documents; they discover errors in closing documents but remain under urgent pressure to close.

Over a four-month period, the project surveyed approximately 1,200 homebuyers about their feelings surrounding the real estate closing process. Some of the respondents closed with traditional paper documents, while some closed with electronic documents and others still closed with a combination of electronic and paper documents.

"[H]omebuyers end up signing documents without properly understanding or evaluating the most critical information," Cordray said. "This creates new anxiety as they worry about what was buried in the stack of paper that may create some nasty surprises in the years ahead."

The findings of the eClosings pilot program are consistent with the impetus behind the "Know Before You Owe" rule and implementation of the TILA-RESPA Integrated Disclosures that have many title agents and lenders scrambling to ensure they are in compliance by October 3 when the new rule takes effect.

Implementation of the new mortgage disclosure rules is expected to cost settlement service providers $67.8 million and lenders $207 million over the next five years, bringing the total cost to $1.3 billion. In his remarks, Cordray said eClosings "hold much promise" for the mortgage industry to improve efficiency and accuracy at a potentially lesser cost.

"While technology alone will not address all consumer concerns, eClosings do offer potential to make the process less complex," Cordray said.

View Cordray's remarks in their entirety at the CFPB newsroom.

Letter to Congress regarding H.R. 1799

Letter to Congress regarding H.R. 1799
Editor's note: Earlier this week, we caught wind of a piece of legislation that's designed to create a more even playing field between affiliated and independent title companies, the "Ensure Fair Practices of Title Insurance Act of 2015." The National Association of Independent Title Agents, asked its members to write to Congress. Federal Title's founder Todd Ewing penned this letter.

Dear Representative:

I am a real estate settlement attorney and small business owner with a staff of 17. Together we operate Federal Title & Escrow Company, the largest independent title company in Washington, D.C. I am writing to ask your support of HR 1799, the "Ensure Fair Practices of Title Insurance Act of 2015," which intends to improve competition in the settlement services industry and lower consumer cost. 

Being an independent title company means we do not share profits with referral sources through Affiliated Business Arrangements or Marketing Service Agreements – two common pay-for-business practices in the settlement services industry, also known as "legal kickbacks." Because we do not "kickback" cash to referral sources, we are able to charge about 20 percent less than affiliated title companies. Over the years, our kickback-free approach has saved consumers nearly $9 million. 

Upcoming changes in our industry, namely implementation of TILA-RESPA integrated disclosures (TRID), are putting pressure on independent title companies like ours. While we support these changes as being in the best interest of consumers, they have increased operating costs. The reality is small businesses such as our independent title company, who are being held to the same rigorous standard as large financial institutions, have struggled to remain profitable while meeting new regulations. 

HR 1799 will provide some relief to independent title companies. It is designed "to amend the Real Estate Settlement Procedures Act of 1974 (RESPA) to prohibit certain financial benefits for referrals of business and to improve the judicial relief for certain violations." In other words, it is designed to make it harder for affiliated companies who buy business instead of earning it to get ahead. 

HR 1799 is an important first step in the process of improving competition within the title industry and lowering consumer costs for title insurance, which is why I'm writing to ask your support. Independent title companies – small businesses – including ours need an even playing field not only to thrive but to survive.

Thank you for your time and consideration. 

CFPB proposes effective date of Oct. 1 for new mortgage disclosure rules

Title companies and lenders who are bracing for one of the biggest shake-ups of the mortgage industry in decades may have a couple more months to prepare. 

The director of the Consumer Financial Protection Bureau announced a proposed amendment to push the effective date of the new mortgage disclosure rules from August 1, 2015 to October 1, 2015

The proposed amendment is up for public comment, and a final decision will be made afterwards; however, for all intents and purposes the new effective date is now October 1, 2015.

The CFPB discovered an "administrative error" in meeting the requirements of federal law, which ultimately resulted in the effective date being pushed into the fall. 

In a statement issued yesterday regarding the Know Before You Owe mortgage disclosure rule, Director Richard Cordray said:

"The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until October 1, 2015. We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks. We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time." 

Implementation of the new mortgage disclosure rules is expected to cost settlement service providers $67.8 million and lenders $207 million over the next five years, bringing the total cost to $1.3 billion.

Representatives from the American Land Title Association, American Bankers Association and Finance Policy Center for the Urban Institute testified before Congress last May, asking for a "hold harmless" period through the end of this year. 

So far efforts to establish a hold harmless period have been unsuccessful, while the proposed amendment is expected to go final shortly. 

Best Practices policy safeguards our clients

Best Practices policy safeguards our clients

Federal Title & Escrow Company was one of the first title companies in the country to implement a series of business procedures with the best interest of consumers – homebuyers and sellers – in mind.

The procedures are known as "Best Practices," and consumers, financial institutions, and real estate agents who work with us can rest easy knowing that each settlement is fully compliant with federal and state regulatory requirements.

What is your title company doing to ensure consumers are protected and treated fairly?

  Federal Title Other title companies
Provides Online Guaranteed Pricing http://federaltitle.com/quote   √   ?
Provides clear, up-front options in choice of owner's title insurance coverage   √   ?
Procedures in place to protect consumers' non-public personal information (NPI)   √   ?
Ongoing training and annual background check requirement for all employees   √   ?
Cyber Privacy and Data Breach Protection Insurance – Up to $1 million of coverage per claim   √   ?
Errors & Omissions (E&O) Insurance – Up to $2 million of coverage per claim   √  ?
Fidelity and Surety Bonded – Up to $250,000 of coverage per claim   √   ?
Meets federal regulatory requirements having completed a standardized risk management process   √   ?
Provides avenue for clients to submit complaints, compliments and other feedback  √   ?
Procedures in place for tracking and resolving customer feedback   √   ?
On-staff Chief Compliance Officer to ensure licenses, insurance, ongoing training and customer feedback log stay current   √   ?

Close It!™ House of the Week: Just listed in the West End

This week we're headed down Wisconsin Avenue from our own office to check out a 2-bedroom, 2-bathroom high rise condo with an open floor plan and nearly 1200 square feet of space. It's listed at $929,000.

This unit has an oversized balcony with southern views. It has a gas fireplace as well as a kitchen will granite counter tops and stainless steel appliances. The building is located just north of the George Washington Hospital and west of the shops and restaurants in Georgetown.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $214,148.73. Monthly payments will then be around $5,725.66 per month, including the HOA payment. For a complete picture of the cash to close, or for a run-down of the seller's side of the deal, plug the numbers into the Web version of Close It™ or download the free iOS app.

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  • What's title insurance?

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