[House Report 115-524]
[From the U.S. Government Publishing Office]


115th Congress      }                                {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session         }                                {        115-524
======================================================================



 
                      TRID IMPROVEMENT ACT OF 2017

                                _______
                                

January 25, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3978]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3978) to amend the Real Estate Settlement 
Procedures Act of 1974 to modify requirements related to 
mortgage disclosures, and for other purposes, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                          Purpose and Summary

    Introduced by Representative French Hill on October 5, 
2017, H.R. 3978, the ``TRID Improvement Act of 2017'' amends 
the Real Estate Settlement Procedures Act to require the 
Consumer Financial Protection Bureau to allow for the 
calculation of the discounted rate title insurance companies 
may provide to consumers when they purchase a lenders and 
owners title insurance policy simultaneously.

                  Background and Need for Legislation

    When an individual purchases a home, they receive a deed, 
which shows the seller transferred legal ownership, or the 
``title,'' to the home. Title insurance can provide protection 
if a buyer is sued for a claim against the home before 
purchase. Common claims come from a previous owner's failure to 
pay taxes or from contractors who say they were not paid for 
work done on the home before purchase. As such, lenders often 
require the purchase of a lender's title insurance policy, 
which protects the amount they lend. If a buyer lied to protect 
his equity in the event of a title problem, the buyer would 
need to purchase an owner's title insurance policy.
    If a borrower purchases both a required lender's title 
policy and an optional owner's title policy simultaneously--a 
process called ``simultaneous issuance''--they may receive a 
potential discount in the total cost. Many state regulators 
require settlement agents to disclose the actual costs--often 
in an itemized list of fees at closing--for each fee the 
homebuyer is responsible for paying. However, the Consumer 
Financial Protection Bureau (CFPB) requires that the lender's 
title insurance policy listed on the disclosures that consumers 
receive when they apply for and close on a residential mortgage 
loan--referred to as the Loan Estimate and Closing Disclosure 
forms--equal the regular cost of the total title insurance 
premium without any adjustments. As a result, the title 
insurance premium on the Loan Estimate and Closing Disclosure 
received by a buyer is different from the premium listed on the 
paperwork received from the title insurance company.
    H.R. 3978 resolves these disparities and requires the CFPB 
to allow the accurate and complete disclosure of title 
insurance premiums and discounts to homebuyers.
    In an October 24, 2017, letter of support for H.R. 3978, 
the American Bankers Association, American Escrow Association, 
American Land Title Association, Association of Mortgage 
Investors, Community Home Lenders Association, Community 
Mortgage Lenders of America, Consumer Mortgage Coalition, 
Credit Union National Association, Escrow Institute of 
California, Housing Policy Council of the Financial Services 
Roundtable, Independent Community Bankers of America, Minnesota 
Land Title Association, Mortgage Bankers Association, National 
Association of Federally-Insured Credit Unions, National 
Association of Home Builders, Nevada Land Title Association, 
Ohio Land Title Association, Palmetto Land Title Association, 
Real Estate Services Providers Council, Securities Industry and 
Financial Markets Association, Texas Land Title Association, 
and U.S. Chamber of Commerce expressed their support for H.R. 
3978, stating:

          [H.R. 3978] would amend the Real Estate Settlement 
        Procedures Act (RESPA) to require the Consumer 
        Financial Protection Bureau (CFPB) to allow the 
        accurate disclosure of title insurance premiums and any 
        potential available discounts to homebuyers.
          Under current regulations, the CFPB does not permit 
        title insurance companies to disclose available 
        discounts for lender's title insurance on the 
        government mandated disclosure forms. This creates 
        inconsistencies in mortgage documents and causes 
        confusion for consumers.
          H.R. 3978 would reduce this confusion by allowing 
        title insurance companies to disclose available 
        discounts and accurate title insurance premiums to 
        consumers. This straightforward fix would benefit 
        consumers across the country.

                                Hearings

    The Committee on Financial Services held a hearing 
examining matters relating to H.R. 3978 on September 7, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
October 11, 2017, and October 12, 2017, and ordered H.R. 3978 
to be reported favorably to the House without amendment by a 
recorded vote of 53 yeas to 5 nays (Record vote no. FC-104), a 
quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 53 yeas to 5 nays 
(Record vote no. FC-104), a quorum being present.




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 3978 
will amend the Real Estate Settlement Procedures Act (RESPA) to 
require the CFPB to allow for the calculation of the discounted 
rate title insurance companies may provide to consumers when 
they purchase a lenders and owners title insurance policy 
simultaneously.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, January 18, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3978, the TRID 
Improvement Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3978--TRID Improvement Act of 2017

    Under current law, the Consumer Financial Protection Bureau 
(CFPB) requires mortgage lenders to disclose certain 
information regarding home loan terms and costs to consumers at 
the beginning and closing of mortgage transactions. H.R. 3978 
would direct the CFPB to require mortgage lenders to disclose 
discounted rates that are available to consumers for title 
insurance premiums and to itemize all actual charges imposed on 
borrowers in the closing documents for mortgages.
    Using information from the CFPB, CBO estimates that 
enacting H.R. 3978 would increase direct spending by less than 
$500,000 for the agency to issue a rule to implement the 
changes to the disclosure requirements.
    Because enacting H.R. 3978 would affect direct spending, 
pay-as-you-go procedures apply. Enacting the bill would not 
affect revenues.
    CBO estimates that enacting H.R. 3978 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 3978 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA).
    The disclosures required by the bill would be private-
sector mandates as defined in UMRA. However, CBO estimates that 
the costs to mortgage lenders to meet the disclosure 
requirements would be small and would not exceed the threshold 
established in UMRA for private-sector mandates ($156 million 
in 2017, adjusted for inflation).
    The CBO staff contacts for this estimate are Stephen Rabent 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was approved by H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed 
rulemakings: The Committee states that the bill requires no 
directed rulemakings.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 3978 as the ``TRID Improvement Act 
of 2017.''

Section 2. Amendments to mortgage disclosure requirements

    This section amends Section 4(a) of the Real Estate 
Settlement Procedures Act of 1974 to require the CFPB to allow 
for the calculation of the discounted rate title insurance 
companies may provide to consumers when they purchase a lenders 
and owners title insurance policy simultaneously.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

             REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974




           *       *       *       *       *       *       *
                      uniform settlement statement

  Sec. 4. (a) The Bureau shall publish a single, integrated 
disclosure for mortgage loan transactions (including real 
estate settlement cost statements) which includes the 
disclosure requirements of this section and section 5, in 
conjunction with the disclosure requirements of the Truth in 
Lending Act that, taken together, may apply to a transaction 
that is subject to both or either provisions of law. The 
purpose of such model disclosure shall be to facilitate 
compliance with the disclosure requirements of this title and 
the Truth in Lending Act, and to aid the borrower or lessee in 
understanding the transaction by utilizing readily 
understandable language to simplify the technical nature of the 
disclosures. Such forms shall conspicuously and clearly 
[itemize all charges] itemize all actual charges imposed upon 
the borrower [and all charges imposed upon the seller in 
connection with the settlement and] and the seller in 
connection with the settlement. Such forms shall indicate 
whether any title insurance premium included in such charges 
covers or insures the lender's interest in the property, the 
borrower's interest, or both. Charges for any title insurance 
premium disclosed on such forms shall be equal to the amount 
charged for each individual title insurance policy, subject to 
any discounts as required by State regulation or the title 
company rate filings. The Bureau may, by regulation, permit the 
deletion from the forms prescribed under this section of items 
which are not, under local laws or customs, applicable in any 
locality, except that such regulation shall require that the 
numerical code prescribed by the Bureau be retained in forms to 
be used in all localities. Nothing in this section may be 
construed to require that that part of the standard forms which 
relates to the borrower's transaction to be furnished to the 
seller, or to require that that part of the standard forms 
which relates to the seller be furnished to the borrower.
  (b) The forms prescribed under this section shall be 
completed and made available for inspection by the borrower at 
or before settlement by the person conducting the settlement, 
except that (1) the Bureau may exempt from the requirements of 
this section settlements occurring in localities where the 
final settlement statement is not customarily provided at or 
before the date of settlement, or settlements where such 
requirements are impractical and (2) the borrower may, in 
accordance with regulations of the Bureau, waive his right to 
have the forms made available at such time. Upon the request of 
the borrower to inspect the forms prescribed under this section 
during the business day immediately preceding the day of 
settlement, the person who will conduct the settlement shall 
permit the borrower to inspect those items which are known to 
such person during such preceding day.
  (c) The standard form described in subsection (a) may 
include, in the case of an appraisal coordinated by an 
appraisal management company (as such term is defined in 
section 1121(11) of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), a 
clear disclosure of--
          (1) the fee paid directly to the appraiser by such 
        company; and
          (2) the administration fee charged by such company.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 3978 would change the way that title insurance fees 
are presented on both the loan estimate and the closing 
disclosure forms that are part of the Truth in Lending Act/Real 
Estate Settlement Procedures Act Integrated Disclosure 
(``TRID'') forms, also known as the TILA/RESPA Rule or the 
``Know Before You Owe'' mortgage disclosure rule. Since the 
rule's inception, TRID disclosures have provided homebuyers 
with consistent and understandable information on what they 
will have to pay at closing on a mortgage loan. The Consumer 
Financial Protection Bureau (``Consumer Bureau'') is currently 
tasked with conducting rulemaking for TRID disclosures.
    Pursuant to the current TRID Rule, the amount that appears 
for the lender's title insurance policy on the loan estimate 
and closing disclosure forms is the amount of the policies 
without any discounts or adjustments that a homebuyer might 
receive if they simultaneously purchase an owner's title 
insurance policy and a lender's title insurance policy 
(``simultaneous issue''). The title insurance industry has 
expressed concerns about this practice, and argue that the 
current TRID disclosures could lead to consumer confusion about 
pricing in states where simultaneous lender and owner title 
insurance policies are issued. However, the bill would not 
benefit consumers in states that do not provide special rates 
to homebuyers for simultaneous policy issuances. In essence, 
H.R. 3978 would enact a sweeping statutory change that 
incrementally benefits consumers in approximately 25 states 
with a specific kind of title insurance regime, with the 
potential to introduce unnecessary confusion into the home 
buying process for consumers in other jurisdictions.
    Furthermore, the Consumer Bureau conducted an extensive 
rulemaking process to develop the regulations for the current 
TILA/RESPA Rule, which includes the disclosure of costs for 
title insurance premiums along with various options and 
calculations. In its research, the Consumer Bureau found that 
``the clear disclosure of the required cost for the lender's 
title insurance alone, and the additional incremental cost to 
be paid by the consumer for the optional owner's title 
insurance premium outweighs the benefit of a technical 
disclosure of the owner's and lender's title insurance 
premiums; such a technical disclosure can result in confusion 
about what the consumer actually may pay if the consumer does 
not obtain an owner's title insurance policy, as well as 
removing any need to provide two Loan Estimates.''\1\ Thus, the 
Consumer Bureau's current TRID rule ensures that for consumers 
in all states, there will not be an unanticipated, dramatically 
higher cost for the lender's title insurance at closing if a 
homebuyer decides to decline an owner's title insurance policy.
---------------------------------------------------------------------------
    \1\Bureau of Consumer Financial Protection, Preamble Integrated 
Mortgage Disclosures under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth In Lending Act (Regulation Z) at p. 860 
(Nov. 2013), available at http://files.consumerfinance.gov/f/
201311_cfpb_final-rule-preamble_integrated-mortgage-disclosures.pdf.
---------------------------------------------------------------------------
    H.R. 3978's prescriptive changes to the TRID forms would 
also remove the Consumer Bureau's ability to amend the 
regulation. This could cause unintended consequences greater 
than the issues that the legislation seeks to address, since 
the Consumer Bureau would no longer have the authority to 
quickly adjust TRID regulations if a problem with H.R. 3978 
arises.
    For these reasons, we oppose H.R. 3978.

                                   Maxine Waters.
                                   Stephen F. Lynch.
                                   Wm. Lacy Clay.
                                   Al Green.
                                   Michael E. Capuano.

                                  [all]