Category Archives:RESPA

CFPB Works to Improve Mortgage Closing Experience

“Buying a home is one of the biggest financial decisions most people will make in their lifetimes, but navigating the closing process can be a challenge, ” said Director Corday of the Consumer Finance Protection Bureau (CFPB). The package of closing documents is large, and the process is overly complex and stressful for consumers. Therefor, the  CFPB has been committed to work on improving the mortgage closing experience and last year’s “Know Before You Owe” rule that integrated the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures, which will take effect in August 2015. The goal of the new rule was to help improve consumer empowerment and avoid surprises at the closing table by requiring that the new closing disclosure be provided at least three business days prior to closing.  .

This month, The CFPB published a report summarizing the results of its Request for Information about the challenges consumers face when closing on a home.  The Bureau identified several “pain points” consumers regularly experience during the closing process.  Consumers reported being frustrated by:

  • The lack of time they have to review a large number of closing documents, even when they did not understand the terms;
  • The lack of resources capable of providing explanations about closing documents, which are often full of legalese and technical jargon; and
  • Minor errors in paperwork resulting in long delays affecting multiple parties.

In addition, the Bureau released guidelines for an upcoming eClosing pilot project to study how eClosings can benefit consumers and address some of the challenges borrowers face at closing. The Bureau hypothesizes that technology-enabled electronic closing (eClosing) solutions may have the potential to improve consumer understanding and empowerment and efficiency for all involved. The intention of this pilot is for the CFPB to conduct targeted research on eClosing solutions and to release the findings publically. To achieve both of these goals, the CFPB will dictate certain terms of the research environment, including specific tests, defined test groups, and a minimum number of loans to close during the pilot. The loan-level data relevant to this study may include data on cost, time, and/or process (e.g., errors, consumer interaction) that will help the CFPB to evaluate the use or impact of eClosing features.