PDF(PDF provides a complete and accurate display of this text.)Tip?
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-524
======================================================================
TRID IMPROVEMENT ACT OF 2017
_______
January 25, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 3978]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3978) to amend the Real Estate Settlement
Procedures Act of 1974 to modify requirements related to
mortgage disclosures, and for other purposes, having considered
the same, report favorably thereon without amendment and
recommend that the bill do pass.
Purpose and Summary
Introduced by Representative French Hill on October 5,
2017, H.R. 3978, the ``TRID Improvement Act of 2017'' amends
the Real Estate Settlement Procedures Act to require the
Consumer Financial Protection Bureau to allow for the
calculation of the discounted rate title insurance companies
may provide to consumers when they purchase a lenders and
owners title insurance policy simultaneously.
Background and Need for Legislation
When an individual purchases a home, they receive a deed,
which shows the seller transferred legal ownership, or the
``title,'' to the home. Title insurance can provide protection
if a buyer is sued for a claim against the home before
purchase. Common claims come from a previous owner's failure to
pay taxes or from contractors who say they were not paid for
work done on the home before purchase. As such, lenders often
require the purchase of a lender's title insurance policy,
which protects the amount they lend. If a buyer lied to protect
his equity in the event of a title problem, the buyer would
need to purchase an owner's title insurance policy.
If a borrower purchases both a required lender's title
policy and an optional owner's title policy simultaneously--a
process called ``simultaneous issuance''--they may receive a
potential discount in the total cost. Many state regulators
require settlement agents to disclose the actual costs--often
in an itemized list of fees at closing--for each fee the
homebuyer is responsible for paying. However, the Consumer
Financial Protection Bureau (CFPB) requires that the lender's
title insurance policy listed on the disclosures that consumers
receive when they apply for and close on a residential mortgage
loan--referred to as the Loan Estimate and Closing Disclosure
forms--equal the regular cost of the total title insurance
premium without any adjustments. As a result, the title
insurance premium on the Loan Estimate and Closing Disclosure
received by a buyer is different from the premium listed on the
paperwork received from the title insurance company.
H.R. 3978 resolves these disparities and requires the CFPB
to allow the accurate and complete disclosure of title
insurance premiums and discounts to homebuyers.
In an October 24, 2017, letter of support for H.R. 3978,
the American Bankers Association, American Escrow Association,
American Land Title Association, Association of Mortgage
Investors, Community Home Lenders Association, Community
Mortgage Lenders of America, Consumer Mortgage Coalition,
Credit Union National Association, Escrow Institute of
California, Housing Policy Council of the Financial Services
Roundtable, Independent Community Bankers of America, Minnesota
Land Title Association, Mortgage Bankers Association, National
Association of Federally-Insured Credit Unions, National
Association of Home Builders, Nevada Land Title Association,
Ohio Land Title Association, Palmetto Land Title Association,
Real Estate Services Providers Council, Securities Industry and
Financial Markets Association, Texas Land Title Association,
and U.S. Chamber of Commerce expressed their support for H.R.
3978, stating:
[H.R. 3978] would amend the Real Estate Settlement
Procedures Act (RESPA) to require the Consumer
Financial Protection Bureau (CFPB) to allow the
accurate disclosure of title insurance premiums and any
potential available discounts to homebuyers.
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.
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.
Hearings
The Committee on Financial Services held a hearing
examining matters relating to H.R. 3978 on September 7, 2017.
Committee Consideration
The Committee on Financial Services met in open session on
October 11, 2017, and October 12, 2017, and ordered H.R. 3978
to be reported favorably to the House without amendment by a
recorded vote of 53 yeas to 5 nays (Record vote no. FC-104), a
quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House without amendment. The
motion was agreed to by a recorded vote of 53 yeas to 5 nays
(Record vote no. FC-104), a quorum being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 3978
will amend the Real Estate Settlement Procedures Act (RESPA) to
require the CFPB to allow for the calculation of the discounted
rate title insurance companies may provide to consumers when
they purchase a lenders and owners title insurance policy
simultaneously.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 18, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3978, the TRID
Improvement Act of 2017.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 3978--TRID Improvement Act of 2017
Under current law, the Consumer Financial Protection Bureau
(CFPB) requires mortgage lenders to disclose certain
information regarding home loan terms and costs to consumers at
the beginning and closing of mortgage transactions. H.R. 3978
would direct the CFPB to require mortgage lenders to disclose
discounted rates that are available to consumers for title
insurance premiums and to itemize all actual charges imposed on
borrowers in the closing documents for mortgages.
Using information from the CFPB, CBO estimates that
enacting H.R. 3978 would increase direct spending by less than
$500,000 for the agency to issue a rule to implement the
changes to the disclosure requirements.
Because enacting H.R. 3978 would affect direct spending,
pay-as-you-go procedures apply. Enacting the bill would not
affect revenues.
CBO estimates that enacting H.R. 3978 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2028.
H.R. 3978 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA).
The disclosures required by the bill would be private-
sector mandates as defined in UMRA. However, CBO estimates that
the costs to mortgage lenders to meet the disclosure
requirements would be small and would not exceed the threshold
established in UMRA for private-sector mandates ($156 million
in 2017, adjusted for inflation).
The CBO staff contacts for this estimate are Stephen Rabent
(for federal costs) and Rachel Austin (for mandates). The
estimate was approved by H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995.
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, (115th Congress),
the following statement is made concerning directed
rulemakings: The Committee states that the bill requires no
directed rulemakings.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section cites H.R. 3978 as the ``TRID Improvement Act
of 2017.''
Section 2. Amendments to mortgage disclosure requirements
This section amends Section 4(a) of the Real Estate
Settlement Procedures Act of 1974 to require the CFPB to allow
for the calculation of the discounted rate title insurance
companies may provide to consumers when they purchase a lenders
and owners title insurance policy simultaneously.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
* * * * * * *
uniform settlement statement
Sec. 4. (a) The Bureau shall publish a single, integrated
disclosure for mortgage loan transactions (including real
estate settlement cost statements) which includes the
disclosure requirements of this section and section 5, in
conjunction with the disclosure requirements of the Truth in
Lending Act that, taken together, may apply to a transaction
that is subject to both or either provisions of law. The
purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this title and
the Truth in Lending Act, and to aid the borrower or lessee in
understanding the transaction by utilizing readily
understandable language to simplify the technical nature of the
disclosures. Such forms shall conspicuously and clearly
[itemize all charges] itemize all actual charges imposed upon
the borrower [and all charges imposed upon the seller in
connection with the settlement and] and the seller in
connection with the settlement. Such forms shall indicate
whether any title insurance premium included in such charges
covers or insures the lender's interest in the property, the
borrower's interest, or both. Charges for any title insurance
premium disclosed on such forms shall be equal to the amount
charged for each individual title insurance policy, subject to
any discounts as required by State regulation or the title
company rate filings. The Bureau may, by regulation, permit the
deletion from the forms prescribed under this section of items
which are not, under local laws or customs, applicable in any
locality, except that such regulation shall require that the
numerical code prescribed by the Bureau be retained in forms to
be used in all localities. Nothing in this section may be
construed to require that that part of the standard forms which
relates to the borrower's transaction to be furnished to the
seller, or to require that that part of the standard forms
which relates to the seller be furnished to the borrower.
(b) The forms prescribed under this section shall be
completed and made available for inspection by the borrower at
or before settlement by the person conducting the settlement,
except that (1) the Bureau may exempt from the requirements of
this section settlements occurring in localities where the
final settlement statement is not customarily provided at or
before the date of settlement, or settlements where such
requirements are impractical and (2) the borrower may, in
accordance with regulations of the Bureau, waive his right to
have the forms made available at such time. Upon the request of
the borrower to inspect the forms prescribed under this section
during the business day immediately preceding the day of
settlement, the person who will conduct the settlement shall
permit the borrower to inspect those items which are known to
such person during such preceding day.
(c) The standard form described in subsection (a) may
include, in the case of an appraisal coordinated by an
appraisal management company (as such term is defined in
section 1121(11) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), a
clear disclosure of--
(1) the fee paid directly to the appraiser by such
company; and
(2) the administration fee charged by such company.
* * * * * * *
MINORITY VIEWS
H.R. 3978 would change the way that title insurance fees
are presented on both the loan estimate and the closing
disclosure forms that are part of the Truth in Lending Act/Real
Estate Settlement Procedures Act Integrated Disclosure
(``TRID'') forms, also known as the TILA/RESPA Rule or the
``Know Before You Owe'' mortgage disclosure rule. Since the
rule's inception, TRID disclosures have provided homebuyers
with consistent and understandable information on what they
will have to pay at closing on a mortgage loan. The Consumer
Financial Protection Bureau (``Consumer Bureau'') is currently
tasked with conducting rulemaking for TRID disclosures.
Pursuant to the current TRID Rule, the amount that appears
for the lender's title insurance policy on the loan estimate
and closing disclosure forms is the amount of the policies
without any discounts or adjustments that a homebuyer might
receive if they simultaneously purchase an owner's title
insurance policy and a lender's title insurance policy
(``simultaneous issue''). The title insurance industry has
expressed concerns about this practice, and argue that the
current TRID disclosures could lead to consumer confusion about
pricing in states where simultaneous lender and owner title
insurance policies are issued. However, the bill would not
benefit consumers in states that do not provide special rates
to homebuyers for simultaneous policy issuances. In essence,
H.R. 3978 would enact a sweeping statutory change that
incrementally benefits consumers in approximately 25 states
with a specific kind of title insurance regime, with the
potential to introduce unnecessary confusion into the home
buying process for consumers in other jurisdictions.
Furthermore, the Consumer Bureau conducted an extensive
rulemaking process to develop the regulations for the current
TILA/RESPA Rule, which includes the disclosure of costs for
title insurance premiums along with various options and
calculations. In its research, the Consumer Bureau found that
``the clear disclosure of the required cost for the lender's
title insurance alone, and the additional incremental cost to
be paid by the consumer for the optional owner's title
insurance premium outweighs the benefit of a technical
disclosure of the owner's and lender's title insurance
premiums; such a technical disclosure can result in confusion
about what the consumer actually may pay if the consumer does
not obtain an owner's title insurance policy, as well as
removing any need to provide two Loan Estimates.''\1\ Thus, the
Consumer Bureau's current TRID rule ensures that for consumers
in all states, there will not be an unanticipated, dramatically
higher cost for the lender's title insurance at closing if a
homebuyer decides to decline an owner's title insurance policy.
---------------------------------------------------------------------------
\1\Bureau of Consumer Financial Protection, Preamble Integrated
Mortgage Disclosures under the Real Estate Settlement Procedures Act
(Regulation X) and the Truth In Lending Act (Regulation Z) at p. 860
(Nov. 2013), available at http://files.consumerfinance.gov/f/
201311_cfpb_final-rule-preamble_integrated-mortgage-disclosures.pdf.
---------------------------------------------------------------------------
H.R. 3978's prescriptive changes to the TRID forms would
also remove the Consumer Bureau's ability to amend the
regulation. This could cause unintended consequences greater
than the issues that the legislation seeks to address, since
the Consumer Bureau would no longer have the authority to
quickly adjust TRID regulations if a problem with H.R. 3978
arises.
For these reasons, we oppose H.R. 3978.
Maxine Waters.
Stephen F. Lynch.
Wm. Lacy Clay.
Al Green.
Michael E. Capuano.
[all]
