TRID, of course.

In the News  

Presented by Prairie Title         
Commentary by Frank Pellegrini, Prairie Title CEO        

August 24, 2015 – TRID. What else? As we move toward implementation of the new TILA-RESPA integrated disclosure rule in six short weeks it’s a challenge to focus on anything else. On Oct. 3 our world will change dramatically. Rarely does such a drastic, externally-imposed change in the way business is transacted occur in an industry, but occur it will.

TRID is a direct descendant of the Dodd-Frank act, passed into law in 2010 in the wake of the financial calamity that roiled the world beginning in late 2008. At more than 2,300 pages, Dodd-Frank is a behemoth. Among its offspring is the Consumer Financial Protection Bureau which is charged with creating and then enforcing hundreds of rules like TRID that will govern how financial services businesses will interact with consumers.

CFPB’s advice to consumers before they enter the home buying process is: Know before you owe. On the industry side, we had all better “know” long before we get the closing table. Dodd-Frank enforcement penalties are steep. Even one violation can cost you $5,000 and it goes up sharply from there.

It is unclear at this point exactly how stringent CFPB enforcement policies will be in the early months of the TRID era. Directory Cordray stated in a June 3 letter to members of Congress that the CFPB’s “oversight of the implementation of the Rule will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the rule on time.” Clearly, the key term is “good-faith efforts.” We will all make mistakes, but it seems if we prepare properly and make every effort to comply with the new rule the Bureau will be tolerant of those mistakes in the early going.
If you’re looking for more information as you continue to prepare, there are resources aplenty, including:

· CFPB’s Know Before You Owe page
· TRID questions answered during ALTA town hall
· Mortgage Bankers Association guidance
· Realtor.org’s TRID page

Let’s keep the discussion going. Call or email me, or write a comment.

Other stories we’re following:    

NAR: Home Prices Rise in Nearly all U.S. Metros.                      
Cook County Opens e-Recording of Deeds.              
REITs up 5 Percent in July.
Q2 Loan Originations up 22 percent.

Educating the Consumer

For a long time I’ve been perplexed by the self-imposed silence the title industry practices when it comes to home buyers and sellers. In our business, virtually all of our outreach efforts have been aimed at intermediaries (attorney, lenders and brokers) rather than the people whose lives are actually affected by the real estate transactions we process for them.

We let others do our talking for us – typically we don’t talk to consumers until they are across the closing table from us – yet we offer products and services that are invaluable to those very consumers even if they don’t realize it. With TRID implementation around the corner, we have a great opportunity to change that dynamic.

To quote an article by author by Nancy Tarr posted on Housing Wire.com, "Consumers have always looked to real estate professionals for help understanding how to buy and sell a home. Traditionally, real estate agents and brokers have led consumer education efforts, and they will continue to play a leading role. But, it’s clear that lenders, as well as title insurance and settlement service providers, will need to play a larger role in helping home buyers and sellers understand the new residential real estate environment."

The American Land Title Association just released a revised, expanded and updated Closing 101 web site specifically created to offer consumers in-depth information about the home buying/selling process. And with electronic closings coming, it is even more imperative that we ramp up our efforts to educate consumers.

I’ve given a great deal of thought to this idea over time and I believe that now is the time to move toward a new communications model for the industry. We’ve been using web sites and social media to provide information directly to consumers with some success, but we need to couple our social media efforts with direct outreach to consumers through new and traditional media as well as other means of connecting.

What do you think?

Post a comment and let’s discuss the future of communications in the real estate industry.

Navigating through Stormy Weather

Times are interesting in the real estate business. As whole, we’re in much better shape than five or six years ago on both the residential and commercial sides of the industry. Though we are not seeing tremendous growth on the financial side of our businesses, real estate activity is good and, broadly speaking, we are holding our own as a rising tide has lifted us all.

Meanwhile, strong winds are brewing that will buffet us in the coming months. In less than 60 days, we will all be dealing with the day-to-day implementation of the new TILA-RESPA rule. While lenders will be hit hardest by the new regulatory requirements, title and settlement companies also will be scrambling to find their way in our new closing environment.

As we batten down the hatches for the incoming regulatory storm, in the title industry we are also facing self-imposed pressure as we continue to implement an industry-wide Best Practices initiative. Together, these twin challenges will have a major effect on how we do business. The headwinds we are facing come close to creating a perfect storm of external and internal pressure that will make for a daunting fall and winter.

We’ll get through it, no doubt, and emerge in 2016 as stronger businesses that offer even greater protection to home buyers and commercial real estate investors. As the proverb goes, “We cannot direct the wind, but we can adjust our sails.”

While we do just that, bear with us as we navigate through some rough weather.

Questions? Comments?

Frank

Two Months to Go: TRID Adjustments Needed

In June, something very surprising happened in the our industry when the Consumer Financial Protection Bureau proposed delaying by two months implementation of the New TILA-RESPA Integrated Disclosure (TRID) rule. If the original date had held firm we would already be working under the new rule.

The delay from the original Aug. 1 date is welcome because it gives us all additional time to prepare. It could also turn out to be a real blessing in disguise if the CFPB takes action on several vital fronts before the new Oct 3 deadline.

First, the real estate industry has been clamoring for a hold-harmless period of up to six months once the new rule goes live. The penalties for inadvertent mistakes made by lenders and title and settlement companies are very steep, and once TRID takes effect we will all be prone to mistakes as this huge changeover occurs.

CFPB also should use this time to fix the inaccurate disclosure of title insurance premiums for consumers. State law and regulation in the majority of the country dictates that consumers must pay title insurance rates that are different than how the CFPB requires the industry to inaccurately disclose these fees. Every homebuyer should be well-informed about the accurate costs of homeownership — including what they pay for each service during the real estate closing process.

Lastly, CFPB now has more time to act upon an important flaw in the wording of TRID documentation by removing the “optional” label attached to title insurance. Telling a consumer that owner’s title insurance is “optional” will mean that homebuyers may be dissuaded from purchasing the same protection that lenders receive from a title insurance policy.

I believe the new TRID rule will benefit consumers and industry alike. In urging government officials to make the vital adjustments noted above, those of us in the front lines are making prudent suggestions that clearly will benefit the settlement process and the consumers who rely on us to make their home-buying dreams come true.

What do you think?