Hill plan on titles passes in House

Bill resets forms’ insurance listing

FRANK E. LOCKWOOD

WASHINGTON — A bill by U.S. Rep. French Hill altering title insurance premium disclosures passed the U.S. House of Representatives this week, part of a legislative package that garnered considerable bipartisan support.

The measure changes the way title insurance costs are listed on loan estimate and closing disclosure forms, documents that are regulated by the Consumer Financial Protection Bureau.

Title insurance can protect home purchasers and lenders if problems with the title are later uncovered, such as pre-existing liens on the property, delinquent property taxes or forged documents.

Under the existing rules, the loan estimate and closing disclosure forms must list the full cost of the lender’s title insurance.

The title insurance industry says that’s misleading. When there is a “simultaneous issuance” of both a lender’s and an owner’s title insurance, the premium for the lender’s title insurance generally drops significantly, they noted.

They want to list the discounted price on the forms. Hill’s legislation would enable them to do so.

The Republican from Little Rock introduced his legislation Oct. 5. The House

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Financial Services Committee approved it 53-5 later in the month.

In their minority report, the five lawmakers acknowledged that Hill’s proposal would benefit some consumers but said it would create confusion for those who don’t buy both policies simultaneously.

The House voted 271-145 for Hill’s legislation, which was amended to add several other lawmakers’ bills. Fortythree Democrats supported the measure.

Mortgage Bankers Association President David H. Stevens applauded passage of

the provision, saying it would “require the Consumer Financial Protection Bureau to allow the accurate disclosure of title insurance premiums and any potential available discounts to homebuyers.”

He urged the Senate to pass it, as well.

American Land Title Association Chief Executive Officer Michelle L. Korsmo also welcomed the vote, saying Hill’s proposal focuses on “improving transparency and making sure consumers receive disclosures that accurately show the cost of the one-time fee that protects their property rights.”

Hill has come up with a “straightforward fix” that will “eliminate the inconsistencies in mortgage documents that

cause confusion for consumers,” she added.

In an interview, Hill said the change is overdue.

“When the CFPB created this rule, they actually made it very complex, made it almost unintelligible for both banks title companies, Realtors and consumers,” he said. “We want information for consumers when they’re buying a house to be clear, concise and accurate and the CFPB’s rule was confusing, complex and actually contributing to inaccuracy when it came to the topic of disclosing the title insurance premium.”

Officials with the consumer bureau did not respond to requests for comment Thursday or Friday.