TRID Improvement Act of 2017 — Potential Impacts to Homebuyers
The TRID Improvement Act of 2017 was introduced to the House on October 5th by Rep. French Hill (R), co-sponsored by Ruben Kihuen (D), to provide clarification, modify disclosures, and deliver regulatory relief to consumers and financial institutions. This legislation requires new processes that could simplify the comprehensive documentation that is associated with buying a home.
Upon passage, the bill would:
- Require forms to state actual filed or promulgated premiums
- Require forms to include the simultaneous issuance discount for lender’s policy
Since the CFPB requires the placement of the word “optional” on the owner’s policy (on the TRID form), it is necessary for there to be clarity for the homebuyer on how much the title insurance will cost without an owner’s policy to prevent any surprises at closing. This disclosure process has the effect of showing new homebuyers that there is only a marginal difference for buying an owner’s policy.
The New CFPB Forms
A Guide to the Loan Estimates & Closing Disclosures
There is concern that complaints from consumers could follow due to the rise in cost of a lender’s policy after the decision is made to not buy an owner’s policy. But currently, since the CFPB doesn’t allow the above disclosures on current forms, it can create confusion or misunderstanding from consumers due to inconsistencies in mortgage documents.
This specific disclosure of title insurance premiums was a significant propeller for the title insurance industry to use a separate settlement statement. It is hoped that The TRID Improvement Act of 2017 (H.R.3978) will take care of this problem. The bill could also ease the minds of lenders and investors about potential liability when discrepancies may occur between the two disclosures. The Improvement Act has been referred to the House Committee on Financial Services.
On October 24, the American Bankers Association penned a letter to the House of Representatives in support of bill — with agreement from 22 other state and national financial and housing organizations and trade associations. These include American Escrow Association, American Land Title Association, the U.S. Chamber of Commerce, Community Mortgage Lenders of America, and the National Association of Home Builders.
Per the ABA letter,
“H.R. 3978 would reduce this confusion by allowing title insurance companies to disclose available discounts and accurate title insurance premiums to consumers. This straightforward fix would benefit consumers across the country.”
With the backing of housing’s biggest trade groups, it would appear the bill will have some real momentum behind it. The legislation is still going through the necessary processes though, so it is still too early to know exactly what is going to happen. Industry professionals should watch out for the latest news coming out of Congress to prepare for what comes next.
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