As we near the end of 2015 I think we should focus on one detail of the new Consumer Financial Protection Bureau (CFPB) regulations, which is the American Land Title Association (ALTA) Settlement Statement. For most residential transactions the ALTA Settlement Statement is a Realtor’s new best friend. This form is quickly becoming the golden ticket among title companies as a solution for navigating new privacy rules that limit which closing documents can be shared from a real estate transaction.
New lending practices mandated by the CFPB, effective Oct. 3rd, in conjunction with existing privacy laws, prevent title companies from sharing the Borrower’s Closing Disclosure with the seller or with Realtors. The Closing Disclosure, or “CD,” combines the HUD-1 and Truth in Lending form and is prepared in most cases by the lender. There are promulgated authorizations from TREC (last paragraph of the new Third Party Financing Addendum) and TAR (“Authorization to Furnish TILA/RESPA Integrated Disclosures”), but it is unknown if lenders’ compliance departments will accept these authorizations. The Closing Disclosure contains non-public information like the term of the loan, interest rate, payment amount, and so forth.
The ALTA Settlement Statement shows all fees from the contract and the Closing Disclosure It also allows Realtors to confirm that all provisions of the contract have been honored and all agreements between parties are satisfied, without specific authorizations for the lender to release the Borrower’s CD. The ALTA form does not contain non-public information, and can be shared with all parties. Most importantly, Realtors requesting a preliminary closing statement will likely be receiving the fees on the ALTA Settlement Statement.
If your title company is unaware of this solution, feel free to refer them to the “ALTA Combined Settlement Statement”.