- April 27, 2016
- All Texas Issuing Offices
- UNDERWRITING - Home Equity Loan Disclosure after TRID
We have been asked several times recently about compliance with both TDI regulations and CFPB regulations in disclosing closing costs in a timely matter on Home Equity Loan closings and issuing intact T-42 and T-42.1 endorsements.
Background: Procedural Rule P-47(B)(12), Basic Manual, states: “(12) Final Disclosure of Fees. The Company must delete subparagraph (1) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) if the Company or its Title Insurance Agent does not provide each owner with a copy of the final settlement statement at least one day before for the business day that the owner executes the insured mortgage and promissory note secured thereby.”
Since the closing title insurance agent no longer prepares a “final settlement statement” as such and with no other summary of “actual fees, points, interest, costs and charges” currently allowed as a substitute, an argument can be made that subparagraph (1) of paragraph 1 should be automatically deleted from the T-42.1 Endorsement until the Rule and the Endorsement form are amended/revised.
An alternative view is that it is possible that the TDI and the courts would rule that once the title company has the closing disclosure signed in its office, the CD is functionally prepared by the title company and the coverage need not be deleted. We would need to know that the borrowers actually received the CD the day before closing from the lender.
Procedural Rule P-73 dealing with the Closing Disclosure and Texas Disclosure Form T-64 does not provide much assistance in resolving this question in that the T-64 is still provided and signed at closing and not 24 hours in advance of closing.
2 POSSIBLE SOLUTIONS:
1. Provide a copy of the T-64 to the borrowers 24 hours in advance of closing; or,
2. Provide a copy of the ALTA Borrowers Settlement statement 24 hours in advance of closing.
Either of these solutions would allow the title agent to issue an intact T-42.1.
While the TDI has not promulgated the ALTA Borrowers statement for use in Texas, neither has TDI prohibited its use simply as a vehicle to allow a title agent to itemize all the fees and charges that fall under the TILA-RESPA Integrated Disclosure rule in a home equity transaction.
A copy of the ALTA form may be found here: https://www.alta.org/cfpb/download.cfm?tridID=2&type=word
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- Exceptions Manual: