Say good-bye to the HUD-1 Settlement Statement

By
Title Company with Federal Title & Escrow Company
http://actvra.in/DdJ

The Consumer Financial Protection Bureau (CFPB), by mandate under Dodd-Frank, will soon change our world once again. 

Just barely two years since the title and mortgage industry was turned upside-down with regulatory changes to the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedure Act (RESPA), the CFPB will be releasing its proposed forms and regulations next month to replace the HUD-1 Settlement Statement, Good Faith Estimate, and Truth-in-Lending Disclosure. 

These new forms will be known as the Loan Estimate and Settlement Disclosure Form.

On its snazzy website, CFPB states that the current 3-page HUD-1 settlement statement is replete with "... Technical and legal jargon ... that may be more confusing than helpful. Complicated and lengthy disclosures can make it hard to answer or even ask the right questions."

So CFPB’s solution is to do away with the current 3-page HUD-1 and replace it with a lengthier and more complicated 5-page document called the Settlement Disclosure Form

This is hardly an improvement. In our experience at the closing table, homebuyers are less likely to review lengthier disclosure forms compared to short form disclosures.

Among other things, these new CFPB forms will require lenders and settlement service providers to overhaul their existing software production systems, re-tool the lender-to-title company interfacing, and re-train staff members — which meanshomebuyers will end up paying more at settlement

Currently, homebuyers pay, on average, $750 for total settlement fees in the Washington DC metro area. With little, if any, benefit to the consumer, I expect that figure to increase to approximately $1,000 with the implementation of these new CFPB forms and regulations.

The current disclosures are more than adequate. At the risk of sounding astringent, if a homebuyer can’t understand the HUD-1 Settlement Statement in its current form, then perhaps that homebuyer shouldn’t be a homebuyer.

Update (07/02/2012):

For those who like the new Settlement Disclosure Form, I'd like to know if you think it's worth an increase of about 30% in settlement fees to your homebuyers.  

Secondly, do you think the last round of changes 2 years ago to the GFE, TIL, and GFE improved your homebuyers' experience?

Lastly, all of these regulatory requirements and changes create higher barriers to entry for competition (i.e., increase in start-up costs).  Over time, established title companies will increase charges to the consumer when faced with less competition.  

 

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Re-Bloggged 5 times:

Re-Blogged By Re-Blogged At
  1. Herman Herrera 06/30/2012 06:57 AM
  2. Nick T Pappas 06/30/2012 11:05 AM
  3. Allen Lomax 07/01/2012 11:35 AM
  4. Gabe Sanders 07/02/2012 03:24 AM
  5. Lenn Harley 07/02/2012 03:36 AM
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Topic:
Real Estate Best Practices
Location:
District of Columbia District of Columbia
Tags:
title insurance
closing costs
cfpb
respa
tila
hud1

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Rainmaker
127,988
Donna Quinlan
Realtor CRS,GRI, Newburyport, Boston's North Shore
Keller Williams Realty

That's too bad. My clients usually understand the Hud quite well. I'm not looking forward to this change. Thanks for the information. I had not heard about the change.

July 03, 2012 04:10 PM
Rainmaker
593,935
Thom Abbott
Midtown Atlanta Condos For Sale
MyMidtownMojo.com Thomas Ramon Realty

I have two words....."heavy sigh!"

Let's see...I looked a tthe Hemlock one and it just seems like a heck of a lot of paper to say the same thing.

I love how we (the government) like to see just how difficult we can make something.

 

July 04, 2012 02:04 PM
Rainmaker
121,892
Jeremy Joslin
Professional Real Estate Marketing and Sales
Coldwell Banker Residential Brokerage

Very interesting Todd.  Sometimes I wonder what the thought process is.  

July 05, 2012 07:29 PM
Rainmaker
670,557
Sharon Parisi
Dallas Homes
Keller Williams Dallas Premier Realty

The original statements worked for me!

August 15, 2012 12:50 AM
Rainmaker
130,762
Liane Thomas - Corona & Riverside Real Estate
Bringing you Home!
The Jet Team, Keller Williams Realty, Corona Real Estate

I don't see anything in a new 5 page form that benefits my buyers. Settlement costs going up by 1/3? Not a benefit...more wasted paper?...not a benefit...

November 02, 2012 01:18 PM
Anonymous
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Rainmaker
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Todd Ewing

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