QM Rules Could Increase Business for Nonaffiliated Title Firms

Nonaffiliated title companies are gearing up for the possibility of increased business as a result of new qualified mortgage rules the Consumer Financial Protection Bureau plans to put into place early next year.

“We definitely imagine more leads and interest,” said Stephen Papermaster, president of First Title & Escrow Inc., Rockville, Md. “Others are recognizing the same trend.”

As part of the QM rules, affiliated title companies’ fees are included in what is generally a 3% points and fees cap lenders cannot exceed if they want to make a qualified mortgage with protection from additional regulatory requirements that are imposed on non-QM loans, he said.

“Because we are independently owned…we operate outside of that 3% [cap] because we are not affiliated,” Papermaster said. As a result, “companies like ours are becoming more attractive” as lenders “are going to start looking outside of their affiliated title companies for title services.”

There have been some questions and opposition to the inclusion of affiliated title companies’ fees in the 3% cap, and he said his company will monitor to see if any other implications of the rule that develop between now and its implementation date but in the mean time it does anticipate it will boost business.

Regardless, he said companies like his who have fulfilled the Statement on Standards for Attestation Engagements 16 SOC 1 Type II service audit also will be in demand as they provide comfort given the heightened responsibility lenders have for third-party business partners as a result of regulatory reform.