Pub 8 2018-2019 Issue 1

12 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S Is the ‘TRID Improvement Act’ an Improvement? FEATURE ARTICLE VICTORIA E. STEPHEN, ASSOCIATE GENERAL COUNSEL, CRCM As for other TRID changes, the proposed rule that seeks to clarify the infamous “black hole” problem is still pending, with no word yet on when it might be made final. W hile we were eagerly awaiting a final rule from the CFPB on the so-called “black hole” tolerance issue, a new bill was swiftly passed by the House of Representatives last month: the TRID (TILA-RESPA Integrated Disclosure) Improvement Act of 2017. On October 5, 2017, Congressman French Hill introduced H.R. 3978, which eventually had four other bills tacked onto it, making it a five-in-one set of changes for the financial services industry. One of these bills, the TRID Improvement Act, specifically amends and clarifies how title insurance premiums and discounts are disclosed on the Loan Estimate and Closing Disclosure. On February 14th, the House of Representative passed the biparti- san bill by a healthy 271 to 145 vote. Now you may be asking yourself, “What exactly is the problemwith how title insurance is disclosed?” Well, to put it simply, it isn’t dis - closed the way it is actually charged, and some argue that this is counter to the general spirit and intent of the TRID rule. As Congressman Hill pointedly put it, “This legislation seeks to correct this error by ensuring that consumers know the exact cost of their title insurance – not the number reported as one price on a lending estimate and another price on a closing document.” In many states, when a borrower pur- chases a lender’s title insurance policy (as is often required by the bank), the borrower will receive a discount on the lender’s title policy if an owner’s title policy is also purchased. This markdown is often called a “simultaneous issue discount,” and although it effectively reduces the rate of the owner’s title policy, the discount is technically applied to the lender’s title policy.