Lack of information and confusion surrounding the new Loan Estimate and Closing Disclosure forms are all among the housing industry’s biggest critiques of the CFPB’s new “Your Home Loan Toolkit.”
In particular, the American Land Title Association (ALTA), the national trade association of the land title insurance industry, has suggested three major changes to the new mortgage shopping guide.
“Overall, the new consumer toolkit is a good resource and provides valuable information for consumers in an understandable manner,” said Michelle Korsmo, ALTA’s chief executive officer. “There’s a funny but necessary paragraph in the new Your Home Loan Toolkit that highlights the confusion consumers will experience when the real estate industry begins utilizing the CFPB’s new Closing Disclosure forms on Aug. 1.”
First, ALTA requested the CFPB change how the toolkit says title insurance policies for homeowners are optional, arguing that the insurance "protects a homebuyer from having to pay legal fees and claims that were not discovered during the title search." ALTA said the CFPB should more accurately show the "peace of mind" homeowners will have if they choose to procure title insurance.
Secondly, ALTA took issue with the confusion that could be caused by "flaws" on the Loan Estimate and Closing Disclosure forms. In the new toolkit, the bureau asks homebuyers to overlook the flaws on these forms and states that a homebuyer may receive a final list of fees at the closing table that differs from the fees that are included on their Loan Estimate and Closing Disclosure.
ALTA argues that in nearly half of the United States, consumers will pay for title insurance rates that are different than how the CFPB requires ALTA members to inaccurately disclose these fees on the new forms.
Finally, the association requested the CFPB add more information about the additional costs of owning a home such as utility fees which include power, water, gas, electricity, etc. “As a homebuyer considers the financial impact of homeownership they should be presented with all of the possible costs they might encounter to maintain their home,” ALTA state
Click here to read more details about the changes.