The red pens have come out as members of the real estate industry start to critique the Consumer Financial Protection Bureau's new mortgage shopping toolkit
The American Land Title Association, which represents 5,400 title insurance companies, became one of the first to request changes to the CFPB's guide, according to an April 1 news release from the trade group.
"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, in the release. "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."
Two of the three changes ALTA requested relate to the toolkit's handling of title insurance policies. ALTA took issue with 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.
Homeowner title policies are just one part of title insurance. Title insurance policies which protect the lender and are paid for by the consumer are mandatory.
Along similar lines, ALTA remained concerned about the confusion that could be caused by "flaws" on the Loan Estimate and Closing Disclosure forms. The toolkit advises that the fees on these forms may differ from the fees cited at closing, ALTA said, forcing its members "to inaccurately disclose these fees." ALTA asked that the CFPB fix the new forms prior to the Aug. 1 implementation to avoid possible confusion.
Finally, ALTA took issue with lack of information pertaining to other costs involved in owning a home, such as utilities. Currently, the toolkit only has one, short reference to utility fees, but ALTA said homebuyers "should be presented with all of the possible costs they might encounter to maintain their home."
The CFPB released the toolkit Wednesday in an effort to prepare the housing industry for the rollout of the new disclosure forms, saying it will help homebuyers understand the costs of real estate settlement.
