Greenbook: A Local Guide to Chesapeake Living - Issue 3 | Page 26

KNOW OWE
before you
By Ken Trepeta

The Consumer Financial
Protection Bureau (CFPB)
has begun a new phase of
work to find ways to improve
the closing of real estate and
mortgage transactions. Initially,
many thought the second round
of “Know Before You Owe” was
going to be another rulemaking
related to RESPA/TILA
modernization. Earlier this year,
CFPB’s solicitation for
information relating to problems
with the closing process raised
concerns that it was going to be
changing the RESPA/TILA rule yet
again, even before the new rule’s
implementation in August 2015.

RESPA/TILA harmonization. NAR
also worked to remove the impediment
to the use of eSignatures and other
elements of electronic document
delivery. NAR expects to be involved
in CFPB’s current work moving
forward.

While the CFPB recognizes the
promise of e-closings and e-document
delivery, they also do not want to miss
possible shortcomings. First, there is
often confusion with regard to what
e-closings are. CFPB does not consider
e-closings to be closings done
exclusively online. Rather, CFPB is
more focused on the elimination of
paper. It is likely that parties would
still meet in most cases; they just
would not be signing stacks of paper.
However, it is unclear whether
However, on April 23, 2014, CFPB
eliminating the paper in and of
clarified its real purpose. The Bureau’s itself yields a real benefit.
current work will be focused on
testing the efficacy of electronic
Another possible shortcoming is that
closings via a pilot project. The pilot
the elimination of paper might make
project will likely begin in October
parties even less likely to read
2014 and carry on for several months. important disclosures. While that
For the project, approximately half
might make closings move quicker, it
a dozen settlement service providers
could be at the expense of consumers
will test electronic versus paper
knowing even less about what they
closing methods. The idea is to
are signing. On the other hand, if
determine whether so called e-closing
measures are taken to ensure
can be less expensive, more effective
consumers do read the documents
or both.
closely, does that add more cost? Or
does it raise the question of whether
NAR has been a leader in advocating
some disclosures are more important
for streamlining the closing process by than others and, therefore, should
providing significant input into HUD’s be treated differently? Should some
RESPA rules and the CFPB’s
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GREENBOOK | SEPTEMBER - OCTOBER 2014

disclosures be completely eliminated?
Or as NAR pointed out with regard to
HUD’s plans with RESPA disclosures
over the last decade—is closing too
late to receive and comprehend this
information?
The first round of the pilot is expected
to conclude in early 2015. Other rounds
are envisioned after the initial round is
completed. NAR and others have
cautioned CFPB not to use this project
to make major changes to RESPA/
TILA. CFPB has acknowledged this
concern