Improving the “Know Before You Owe” Rule

When buying or selling a home, the total purchase price is the figure most of us are concerned with. The thick stack of documents involved in the process can be overwhelming, and trying to decipher the dense legalese and complicated tables often is beyond the ken of the average person. In October of 2015, the Consumer Financial Protection Bureau attempted to make the process easier by enacting the TILA-RESPA Integrated Disclosure Rule. This rule, formally known as TRID but casually referred to as “Know Before You Owe”, aimed to make mortgage paperwork more transparent and easier to understand for consumers.

TRID is “designed to empower consumers with the information they need to make informed mortgage choices,” according to the CFPB. It replaces four borrower disclosure forms with two streamlined ones, the Loan Estimate and the Closing Disclosure. It also requires creditors to give consumers three business days to review the Closing Disclosure and to ask questions before the loan closes.

However, in some states, this means that homebuyers are not receiving accurate disclosures of their title insurance premiums because the CFPB does not allow the calculation of a discounted rate that title insurers can provide to consumers when they purchase both a lender’s and owner’s title insurance policy at the same time.

There is current, bipartisan legislation before the House of Representatives that addresses this problem. Known as the TRID Improvement Act of 2017, it was introduced in early November by Arkansas Republican Representative French Hill, and Representative Ruben Kihuen, a Democrat from Nevada. The bill not only has support on both sides of the aisle, it also now has the backing of such groups as the Mortgage Bankers Association, the American Bankers Association, the American Land Title Association, and the National Association of Home Builders.

These groups collectively sent a letter of support to the House of Representatives, explaining the importance and necessity of this legislation. “Under current regulations, the CFPB does not permit title insurance companies to disclose available discounts for lender’s title insurance on the government mandated disclosure forms. This creates inconsistencies in mortgage documents and causes confusion for consumers,” the groups explain “H.R. 3978 would reduce this confusion by allowing title insurance companies to disclose available discounts and accurate title insurance premiums to consumers.” The groups want to emphasize to lawmakers that this simple and straightforward “fix” of the CFPB rules would benefit consumers all across the United States.

SETCO Title Services supports this legislation as well and wants to assist homebuyers as well as sellers in understanding of all of the necessary costs and fees associated with title insurance and the entire closing process. In order to enable their clients to make the most informed choices, the Setco Instant Estimate calculator can quickly and easily figure buyer cost estimates as well as title quotes and seller net sheets.

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