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TILA–RESPA INTEGRATED DISCLOSURE: 

EXAMINING THE COSTS AND BENEFITS 

OF CHANGES TO THE REAL ESTATE 

SETTLEMENT PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND INSURANCE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MAY 14, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–24 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND INSURANCE

BLAINE LUETKEMEYER, Missouri, Chairman 

LYNN A. WESTMORELAND, Georgia, Vice 

Chairman 

EDWARD R. ROYCE, California 

SCOTT GARRETT, New Jersey 

STEVAN PEARCE, New Mexico 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

DENNIS A. ROSS, Florida 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

ROGER WILLIAMS, Texas 

EMANUEL CLEAVER, Missouri, Ranking 

Member 

NYDIA M. VELA ́ ZQUEZ, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

AL GREEN, Texas 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

JOYCE BEATTY, Ohio 

DANIEL T. KILDEE, Michigan 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

May 14, 2015 ..................................................................................................... 1 

Appendix: 

May 14, 2015 ..................................................................................................... 31 

WITNESSES 

THURSDAY, MAY 14, 2015 

Evans, Diane, Vice President, Land Title Guarantee Company, and President, 

American Land Title Association (ALTA), on behalf of ALTA ......................... 5 

Goodman, Laurie S., Director, Housing Finance Policy Center, the Urban 

Institute ................................................................................................................ 7 

Lowman, Cindy, President, United Bank Mortgage Corporation, United Bank 

of Michigan, on behalf of the American Bankers Association (ABA) ............... 3 

Polychron, Chris, 2015 President, the National Association of REALTORS® 

(NAR) .................................................................................................................... 8 

APPENDIX 

Prepared statements: 

Evans, Diane ..................................................................................................... 32 

Goodman, Laurie S. .......................................................................................... 43 

Lowman, Cindy ................................................................................................. 57 

Polychron, Chris ............................................................................................... 67 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Luetkemeyer, Hon. Blaine: 

Written statement of Habitat for Humanity .................................................. 72 

Written statement of the Independent Community Bankers of America .... 74 

Written statement of IMPACT Mortgage Management Advocacy and Advisory Group, Inc. .......................................................................................... 76 

Written statement of the Mortgage Bankers Association ............................. 85 

Written statement of the National Association of Federal Credit Unions .. 89 

Ellison, Hon. Keith: 

Written responses to questions for the record submitted to Diane Evans, 

who testified on behalf of the American Land Title Association .............. 91 

Letter to Diane Evans requesting complete answers to the questions 

for the record, dated July 10, 2015 .............................................................. 101 

Reply letter from Steven Gottheim, Counsel, American Land Title Association, dated July 15, 2015 ......................................................................... 105 

Pearce, Hon. Steven: 

Letter in support of H.R. 2213, signed by 16 organizations, dated May 

5, 2015 ............................................................................................................ 106 

(1) 

TILA–RESPA INTEGRATED DISCLOSURE: 

EXAMINING THE COSTS AND BENEFITS 

OF CHANGES TO THE REAL ESTATE 

SETTLEMENT PROCESS 

Thursday, May 14, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING

AND INSURANCE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:02 p.m., in room 

2128, Rayburn House Office Building, Hon. Blaine Luetkemeyer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Luetkemeyer, Westmoreland, 

Pearce, Ross, Barr, Rothfus, Williams; Green, Moore, Ellison, and 

Beatty. 

Ex officio present: Representative Hensarling. 

Also present: Representative Sherman. 

Chairman LUETKEMEYER. Welcome, everybody. Welcome to our 

new digs. We had a hearing this morning, and this is our initial 

subcommittee hearing. Sorry to see you all so far away, but this 

is the new way we are going to have to do business here as a result 

of remodeling efforts. But thank you for being here. 

The Subcommittee on Housing and Insurance is hereby called to 

order. And without objection, the Chair is authorized to declare a 

recess of the subcommittee at any time. I do want to mention that 

we have votes coming up probably in the 2:30 to 2:45 range. So unfortunately, we will probably be leaving shortly for a little while. 

But we hope to get through the testimony. We will see how it 

works here. 

Today’s hearing is entitled, ‘‘TILA-RESPA Integrated Disclosure: 

Examining the Costs and Benefits of Changes to the Real Estate 

Settlement Process.’’ 

Before we begin, I would like to thank the witnesses for appearing before the subcommittee today. We look forward to your testimony. And I will now recognize myself for 3 minutes to give an 

opening statement. 

For the majority of American consumers, the purchase of a home 

is the most important and expensive financial transaction they will 

ever make, and the process in place today is confusing and burdensome. Twenty-three percent of respondents in an October 2013 poll 

by USA Today said that they would rather gain 10 pounds than go 

2 

through the mortgage process. Seven percent said they would rather spend a night in prison than go through the mortgage process. 

What does that tell you about the system? I think it tells you the 

system needs to be fixed, and we owe it to the consumers to make 

sure this process works and is as straightforward and simple as 

possible. 

August is one of the busiest times of the year for home closings, 

when thousands of homeowners will sit at a closing table on or 

after August 1st. It remains to be seen whether or not parties will 

be ready for the new TILA-RESPA Integrated Disclosure process, 

or TRID. We continue to hear from businesses that tell us industry 

and vendors simply aren’t ready for TRID or the liability that accompanies it. This is despite having spent, according to some estimates, upwards of $100 million on new systems, vendors, and education. 

Dramatic changes to the settlement process, paired with the 

reset provisions included in TRID, have the potential to unnecessarily delay closings and cause a ripple effect throughout the real 

estate market. Strict enforcement and increased liability for lenders will only exacerbate the situation. This is particularly true for 

small businesses party to real estate closings that are likely to be 

left at the table with greater exposure and limited guidance from 

the Consumer Financial Protection Bureau (CFPB). 

For years, Congress, consumer advocates, and industry groups 

have called for simpler settlements. To be clear, I fully support efforts to streamline the process. No one disagrees that there is a 

need for improvement. But we need to go about this in an appropriate manner and take the time to ensure that consumers aren’t 

negatively impacted by something designed for them. 

Consumers, industry, and the CFPB itself stand to benefit from 

a delayed enforcement period. I imagine that is why the Center for 

Responsible Lending joined in a letter with the industry and has 

since reiterated its support for a period of restrained enforcement 

and liability. 

At the end of the day, what is most important is that we get this 

right. Part of that is ensuring industry has the information it needs 

to facilitate a smooth transition. We owe it to consumers to make 

sure this process is worthwhile and does more than give away 5 

pages of disclosure and replace it with 10 pages. Given the approximately $100 million price tag and the years of work we will need 

to put a disclosure system in place that is clear and direct, I am 

not sure TRID does that. 

I look forward to today’s testimony and gaining a better understanding of what changes to the settlement process will mean for 

everyone sitting at the closing table. 

The Chair now recognizes Mrs. Beatty from Ohio, who today is 

filling in for the ranking member of the subcommittee, Mr. Cleaver. 

She is recognized for 5 minutes for an opening statement. 

Mrs. BEATTY. Thank you, Mr. Chairman. And thank you for holding this timely hearing. I also thank our witnesses today. 

It is my honor to be here pinch hitting for Congressman Cleaver. 

And we are all here for the consumers, and we have heard that. 

But today we are here to hopefully have a better understanding of 

the Consumer Financial Protection Bureau’s TILA-RESPA InteVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
3 

grated Disclosures and what the implementation of these rules will 

mean both to the industry and to the consumers. These disclosures 

aim to reduce the overlapping of the information received by the 

consumers, as well as to simplify the overall origination process, 

which I support. 

I also applaud the CFPB’s efforts in engaging in consumer and 

industry research to put forth a good rule. In fact, just yesterday 

I heard from a large contingency of the Ohio Association of REALTORS® who are accepting of this new rule. They are not asking 

for change or to challenge the rule, but what they have expressed 

to me is that they would like to kind of have a test run, so to 

speak, of the rule. They need a preseason to work out all the nuances in the new disclosures form. 

I liken that to a new rule in my district when people were speeding and they decided that they were going to put up cameras. Well, 

they gave them a 30-day notice to kind of get used to it before they 

enforced it. 

At the end of the day, we are here to bridge the gap between effective compliance and ensuring that the rule’s implementation is 

in the best interests of both the REALTORS® and the home buyers. We have heard the stories from the chairman about how difficult it can be for those who are buying their first home, and any 

of you, if you have purchased a home, you also know about the 

plethora of paperwork and the forms that have to be signed. 

And in the aftermath of the 2008 housing crisis, I hope to learn 

today that all consumers, both buyers and sellers, will have the 

proper education and understanding of the TILA-RESPA disclosures to make the mortgage loan closing process as fluid and seamless as possible. 

Thank you, Mr. Chairman, and I yield back the balance of my 

time. 

Chairman LUETKEMEYER. Thank you, Mrs. Beatty. 

Today, we welcome to the hearing four great witnesses: Ms. 

Cindy Lowman, president, United Bank Mortgage Corporation, 

United Bank of Michigan, testifying on behalf of the American 

Bankers Association; Ms. Diane Evans, vice president, Land Title 

Guarantee Company, testifying on behalf of the American Land 

Title Association; Ms. Laurie Goodman, director, Housing Finance 

Policy Center, the Urban Institute; and Mr. Chris Polychron, executive broker, 1st Choice Realty, and 2015 president, the National 

Association of REALTORS®, testifying on behalf of the National 

Association of REALTORS®. Thank you all for being here. 

With that, you will each be recognized for 5 minutes to give your 

testimony. 

Ms. Lowman, you get to start today, 5 minutes. Thank you very 

much. 

STATEMENT OF CINDY LOWMAN, PRESIDENT, UNITED BANK 

MORTGAGE CORPORATION, UNITED BANK OF MICHIGAN, ON 

BEHALF OF THE AMERICAN BANKERS ASSOCIATION (ABA) 

Ms. LOWMAN. Chairman Luetkemeyer, Mrs. Beatty, my name is 

Cindy Lowman. I am president of United Bank Mortgage Corporation, which is a wholly owned subsidiary of United Bank of MichiVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
4 

gan. We are a $468 million community bank based in Grand Rapids. 

I also serve as the chairman of the ABA Mortgage Markets Committee. I am pleased to be here today to testify on behalf of the 

ABA on concerns over the pending implementation of the Truth in 

Lending and the Real Estate Settlement Procedures Act Integrated 

Disclosures, known as TRID. 

These rules are scheduled to go into effect on August 1st this 

year. Between now and then, banks and their vendors must undertake a tremendous amount of work to comply with these rules. In 

cases like mine, banks may not even have the third-party systems 

that they need until after the deadline. 

The real impact of this rushed deadline will be felt by consumers 

who will face costly delays in getting the credit they need to buy 

a home. This is why we are joining with members of this committee 

in requesting that the CFPB formally announce a clear delay of 

this enforcement. 

TRID will impact every mortgage loan made in the United 

States. It is critical that this rule is implemented smoothly so that 

it does not end up hurting creditworthy customers who want to 

own a home. Although intended to simplify the disclosure process, 

if not implemented properly, TRID could add significant complications that will end up costing consumers. 

TRID’s objective of integrating consumer disclosures is commendable. TILA and RESPA both serve important purposes. But the disclosure regimens developed under each statute have swelled in 

complexity. The sheer volume of documentation overwhelms the 

borrower, and true disclosure has become virtually meaningless. 

ABA and consumers and industry groups have sought for years 

to streamline and simplify this process. The CFPB, to its credit, 

undertook this project in an open and responsive process and incorporated many changes urged by industry participants. Despite this, 

the new forms remain lengthy and intimidating to the average customer. Given the scope and complexity of these new rules, this implementation of regulation will impose high costs on all lenders and 

consumers. 

Our most urgent concern right now is the looming August 1st 

deadline. Between now and then, banks must fully review all of the 

final rules; implement new systems, processes, and forms; train 

staff; and test these changes for quality assurance before we bring 

them online. 

Implementation is further complicated by the fact that most 

smaller community banks rely on vendors for regulatory compliance and the accompanying software updates and system upgrades. 

An alarming number of banks report their vendors are not yet 

ready to provide the necessary updates to individual institutions. 

An ABA survey shows that 79 percent of banks cannot verify that 

they will have the systems by the deadline. 

For some institutions, stopping any mortgage lending is the answer to this deadline because the consequences are too great if the 

implementation is not done correctly. At my bank, we are still 

waiting for systems from our third-party providers and do not expect some of the product offerings to be available in our software 

system by the August 1st deadline. This means that as of the deadVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
5 

line, I will be able to take mortgage applications but will not be 

able to close certain loans where I do not have systems in place. 

We must get this right for the sake of our customers, our bank’s 

representation, and to promote the recovery of the housing market. 

There are very reasonable solutions that Congress envisioned that 

enabled the Bureau to avoid the negative consequences of an arbitrary August 1st deadline. 

ABA strongly supports the efforts of Chairmen Luetkemeyer and 

Neugebauer and Representatives Maloney and Barr in asking the 

Bureau to treat the time period between August 1st, 2015, and December 31, 2015, as a hold harmless period for enforcement and liability under the new rules and to formally announce such period 

to ensure that the prudential regulators and secondary market 

stakeholders do the same. 

ABA thanks Representatives Pearce and Sherman for introducing H.R. 2213, which provides for a hold harmless period. We 

urge quick action to avoid the potential harm to our mortgage customers. 

The bottom line is this: These are complex rules, and implementing them must be done in a careful manner. If implementation 

is rushed ahead of schedule, it will only lead to confusion and 

delays that will be costly for consumers. 

Thank you. And I would be happy to answer any questions. 

[The prepared statement of Ms. Lowman can be found on page 

57 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Ms. Lowman. We will get 

you a prize. I think you are one of the few witnesses I have ever 

seen in this committee who actually finished significantly ahead of 

schedule. Thank you very much. 

Ms. Evans, you are now recognized for 5 minutes. 

STATEMENT OF DIANE EVANS, VICE PRESIDENT, LAND TITLE 

GUARANTEE COMPANY, AND PRESIDENT, AMERICAN LAND 

TITLE ASSOCIATION (ALTA), TESTIFYING ON BEHALF OF 

ALTA 

Ms. EVANS. Chairman Luetkemeyer, Ranking Member Beatty, 

and subcommittee members, my name is Diane Evans, and I am 

vice president of Land Title Guarantee Company, a title insurance 

agent in Colorado. 

I joined Land Title Guarantee Company 34 years ago when I 

opened a branch in my hometown. I also have the privilege of serving as the president of the American Land Title Association, the 

national trade association representing the abstract real estate settlement and land title insurance industry. 

ALTA has more than 5,400 member companies ranging from 

small one-person operations to large publicly traded companies. 

Our industry employs more than 108,000 professionals, and our 

members have offices in every county in the United States. 

In 78 days, our industry faces its biggest regulatory change I 

have seen in my 34 years in the business. I am talking about the 

implementation of the Consumer Financial Protection Bureau’s 

TILA-RESPA Integrated Disclosures, or TRID, as you are hearing 

it called. 

6 

As president of ALTA, I have had the opportunity and privilege 

to travel across the country and talk to lenders, to real estate 

agents, and to settlement professionals about this new regulation. 

The main lesson from those conversations is that collaboration is 

crucial. The new regulation is overreaching, it is expensive, and it 

is confusing, not only for small companies, but for large companies 

as well. 

Implementing TRID requires more than just simply updating our 

systems for two new forms. It requires a paradigm shift in the way 

we do business and the way real estate settlements occur across 

the United States. Our industry will invest almost $1.3 billion to 

comply with this regulation. After August 1st, if a consumer better 

understands their transaction, it will be worth it. 

Let me tell you a little about my company. We have been spending a great amount of time coordinating with our real estate community. We have already trained over 1,000 real estate agents. We 

have worked with 300 lenders and we have worked with their employees and over 60 homebuilder employees to understand this new 

process. It has taken many of our staff away from their regular 

jobs of serving home buyers each and every day. 

There are two ways that Congress and the CFPB can help industry implement TRID. First, the CFPB absolutely must fix their requirement that consumers receive inaccurate prices for title insurance. This is the only cost under the new form and under the new 

rule that the CFPB prevents home buyers from knowing the actual 

amount they will pay for title insurance. 

Purchasing a home is one of the largest investments a consumer 

makes in their lifetime. Home buyers want and need to know the 

true cost of that transaction, including the one-time cost of the title 

insurance premium that protects that investment. TRID fails consumers in that regard. 

Second, the CFPB should provide a hold harmless period, as we 

heard from other witnesses. While the CFPB has provided some 

helpful assistance on implementation, our members need more time 

to ensure that process changes demanded by TRID won’t result in 

delays for those home buyers. This is why we strongly support H.R. 

2213, and we thank Congressmen Pearce and Sherman for introducing this legislation. Without that hold harmless period, consumers may experience delays, and REALTORS®, lenders, and settlement agents want to make sure that doesn’t happen. 

Disruptions or delays in real-life transactions don’t just affect one 

family. Its consequences affect more. In a typical transaction, the 

seller of one house is going to be the buyer of another. The domino 

effect of one’s closing being delayed results in a number of families 

being stranded, leaving them looking for alternative housing with 

moving vans sitting in their driveways. 

Our members conduct closings each and every day and take 

great pride in helping consumers protect their homeownership. 

Help us ensure that home buyers leave our offices with keys in 

hand and better understand the costs of their transaction, including that of title insurance. 

I appreciate the opportunity to be here, and ALTA is eager to 

serve as a resource. Thank you. 

7 

[The prepared statement of Ms. Evans can be found on page 32 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Ms. Evans. 

Ms. Goodman, you are recognized for 5 minutes. 

STATEMENT OF LAURIE S. GOODMAN, DIRECTOR, HOUSING 

FINANCE POLICY CENTER, THE URBAN INSTITUTE 

Ms. GOODMAN. Chairman Luetkemeyer, Ranking Member 

Beatty, and other members of the subcommittee, thank you very 

much for the opportunity to testify today. 

My name is Laurie Goodman, and I am the director of the Housing Finance Policy Center at the Urban Institute. The Urban Institute is a nonpartisan research organization located in Washington, 

D.C. The Housing Finance Policy Center provides timely, data-driven analysis of policy issues relating to housing finance and the 

housing market. 

Prior to joining Urban 2 years ago, I spent almost 30 years as 

a mortgage-backed securities analyst and head of securitized products, research, and strategy groups at several firms including Amherst Securities and UBS. The views expressed in this testimony 

are my own and should not be attributed to the Urban Institute, 

its trustees, or its funders. 

Today, I want to cover two points. First, I will discuss the TILARESPA Integrated Disclosure and make the case that the CFPB 

should offer a hold harmless period through the end of 2015. Second, I will explain why these disclosures are really a minor operational issue in the context of a housing finance system that is 

stuck in limbo. Resolving this limbo by finishing the work of reforming Fannie Mae and Freddie Mac is the most important issue 

facing this country’s housing market today. 

I will start with the new disclosures. The 2010 Dodd-Frank Act 

tasked the CFPB with combining the two sets of disclosures borrowers receive and rarely understand into one consumer-friendly 

form. The CFPB completed this enormous task in November of 

2013, and after a few further tweaks has scheduled it to take effect 

on August 1st, 2015. 

I believe the CFPB has done a good job here and the results will 

definitely improve the closing experience for borrowers. But lenders 

need more time to implement this enormous change. The August 

1st implementation date is too tight for many lenders. 

Yes, they have had 21 months to implement these changes, but 

lenders could not begin systems development until the data elements in the Mortgage Industry Standards Maintenance Organization (MISMO), on which they were all dependent, was complete, 

and that happened just 3 months ago. And it takes time to develop 

a new system, integrate it into existing loan-origination platforms, 

and train your staff. 

These new disclosures won’t meet the end goal, improving the 

consumer experience, if lenders are not ready to implement them. 

What will happen instead is that lenders will delay and avoid closings. A hold harmless period is the best of both worlds. It requires 

implementation but offers lenders the necessary protection to begin 

doing their job, which is making loans. 

8 

So I would urge the CFPB to provide a reasonable hold harmless 

period through the end of the year following the August 1st effective date of the TRID regulation. 

Now, let’s talk about the real elephant in the room, the unfinished business of reforming Fannie Mae and Freddie Mac. The 

great news is that all the work done to reform the GSEs was not 

wasted. It has allowed me and many on both sides of the political 

divide to conclude that the goals of legislative reform should be to 

preserve the 30-year fixed-rate mortgage, assure broad access to 

credit, and move the bulk of the risk to the private market. There 

has been a growing recognition that the government, and hence the 

taxpayers, must bear the catastrophic risk, but this should be insulated behind private capital so the risk, if it is ever tapped, is remote. 

Yes, there has been significant progress through administrative 

channels in lieu of legislative movement. 

The Federal Housing Finance Agency (FHFA) has tackled the 

issues of lenders adding their own more restrictive requirements to 

the GSE’s requirements by clarifying when the GSEs can put loans 

back to lenders and by curbing compensatory fees applicable to delinquent loans on the servicing side. They have also brought private capital back through the CAS and STACR back-end risk-sharing transactions and transactions with reinsurers. There have been 

a few transactions where risk has been shared at the point of origination. And the FHFA has instructed the GSEs to begin work on 

the common securitization platform, and has put forth a proposal 

for a single security. 

And, yes, there are additional steps the FHFA could pursue, including creating structures which provide discovery of market pricing and expanding the common securitization platform to include 

other market competitors. 

But even so, administrative reforms cannot take us all the way, 

and that presents an opportunity for Congress to make a real difference. Without congressional action, as a practical matter the 

GSEs cannot be taken out of conservatorship, and the system cannot allow for additional competitors. 

We urge Congress to move forward and address these issues in 

a careful and thoughtful manner. 

Thank you. 

[The prepared statement of Ms. Goodman can be found on page 

43 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Ms. Goodman. 

And Mr. Polychron, you have 5 minutes. 

STATEMENT OF CHRIS POLYCHRON, 2015 PRESIDENT, THE 

NATIONAL ASSOCIATION OF REALTORS® (NAR) 

Mr. POLYCHRON. Thank you, sir. 

Chairman Luetkemeyer, Mrs. Beatty, and subcommittee members, I am Chris Polychron, the 2015 president of the National Association of REALTORS® (NAR). I am a commercial and residential REALTOR® and executive broker for 1st Choice Realty in Hot 

Springs National Park, Arkansas. 

On August 1st, 2015, significant RESPA-TILA changes will go 

into effect. NAR is generally supportive of this move to harmoniVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
9 

zation as long as it benefits consumers and makes the real estate 

transaction smoother. 

However, we see potential bumps in the road, bumps in the road 

that could cost families time and money and cause serious frustration. It is clear that RESPA-TILA integration is going to be a learning experience for everyone. 

Before I get to the heart of my testimony, I would like to thank 

Chairman Luetkemeyer for weighing in with the CFPB on this 

issue. I would also like to thank Congressman Barr and Congresswoman Maloney for their bipartisan sign-on letter to the CFPB, 

and finally Congressman Pearce and Congressman Sherman for 

their bipartisan legislation to aid in this effort. 

NAR and a broad coalition have sent a letter to Richard Cordray, 

Director of the Consumer Financial Protection Bureau, outlining 

our concerns. Here is what we communicated to the Bureau. 

First and foremost, NAR has asked the CFPB to make August 

1st, 2015, through December 31, 2015, a trial implementation period of restrained enforcement. During this period the industry will 

operate under the rule and new forms but will be held harmless 

in terms of enforcement and liability as long as they act in good 

faith. Industry and the CFPB can then collect data on problems 

and develop solutions to minimize costly and harmful impact on 

consumers. This 5-month testing period should provide enough 

time for everyone to get it right. 

It also means the full-fledged implementation from some of the 

busiest months in our industry to the least busy months of January 

and February. We are asking for this grace period because of the 

potential impact to the consumers. Even if only 10 percent of the 

transactions experience issues with the rule implementation, the 

numbers will still be significant. That could mean as many as 

40,000 transactions a month with problems, and potentially many 

more. This is certainly something REALTORS® and the industry 

would like to avoid. 

The good news is there is a precedent for the CFPB to create 

such a period. The Department of Housing and Urban Development 

took a similar approach when we revised the RESPA disclosure in 

2010. We believe that effort should serve as a model for the CFPB 

and would produce the best outcomes for everyone involved. 

We believe the CFPB can provide more detailed written guidance 

on a number of issues; clarify where RESPA and TILA liability 

apply, and that the preapproval process can coexist with the rules 

regarding issuance of the loan estimate; ensure that consumers can 

still choose an agent that closes a transaction without lender interference, the same way one chooses their lawyer to represent them 

and not their opponent; and finally, provide more information and 

flexibility on the bona fide financial emergency waiver and other 

waiver authority. 

Overall, REALTORS® understand that RESPA-TILA integration 

is a monumental effort, decades in the making. The CFPB has done 

good work, and we hope a few small steps can help take this giant 

leap forward. We will continue to work with the CFPB and our industry partners in this effort. 

Thank you for this opportunity to testify, and I look forward to 

answering any questions. 

10 

[The prepared statement of Mr. Polychron can be found on page 

67 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Polychron. 

With that, I will begin the questioning and recognize myself for 

5 minutes. 

Mr. Polychron, one of the arguments that CFPB uses for their 

date of August 1st is that it is a slow time of year for applications/ 

closings. You are in the business. Tell me. 

Mr. POLYCHRON. I am in the business, and that is an erroneous 

statement. 

Chairman LUETKEMEYER. We have 12 months, where does August rank in the— 

Mr. POLYCHRON. Busiest. 

Chairman LUETKEMEYER. Busiest. 

Mr. POLYCHRON. Third. 

Chairman LUETKEMEYER. Probably third. Okay. 

Mr. POLYCHRON. I have statistics for that, sir. 

Chairman LUETKEMEYER. Perfect. That is what I am looking for, 

that is the answer I need. Because we need that information to be 

able to refute what they are saying. So thank you for that testimony. 

Mr. POLYCHRON. You are very welcome. 

Chairman LUETKEMEYER. Ms. Lowman, I recently met with a 

group, I spoke to a group of bankers on Monday and they were 

talking about this issue. And I told them, I said, ‘‘You really have 

two choices. You either stop lending for a period of time prior to 

and thereafter August 1st or you fill out two sets of documents and 

hope that by handing the examiners two sets of documents, you are 

compliant, and let them take their choice. 

And so I am kind of curious what your solution is, because I just 

got done talking yesterday with one of the largest mortgage lenders 

in the country, and they are going to go the route of two sets of 

paperwork. This is double cost for them. They are going to eat the 

cost of this because they don’t want the consumer to bear it. But 

by the same token, it is going to be very, very cumbersome to protect themselves against the liability exposure of making a mistake. 

Can you tell us what your thought process is on that? 

Ms. LOWMAN. As you know, anything that we do after August 

1stst falls under the new rule, but we still will be closing business 

from the prior application. So we will be using two sets of documents throughout that period anyway. 

As I indicated earlier, I have been working side by side with my 

software company since last year. They have not been able to 

produce the final documents to the satisfaction of our staff. So we 

are just now starting the testing of those documents. We are not 

handing any of those new documents to customers as of this point 

in time. 

Chairman LUETKEMEYER. What do you estimate is your time to 

be able to be compliant? Do you think you will be able to get it 

done by the first of August, be able to have your software and systems in place so that you can comply? 

Ms. LOWMAN. We are being promised that most of our documents 

will be available, but there will be some loan products that we 

11 

offer, including the rural development products for 100 percent 

down on low income, that will not be available only August 1st. 

Chairman LUETKEMEYER. Okay. You represent the ABA. So 

across the country, what is the consensus, that most banks will be 

in compliance or be able to be compliant, or most will not be able 

to be compliant? Or do you have a percentage? What are your 

thoughts on that? 

Ms. LOWMAN. We do have statistics on that, but the understanding is that most of our banks are concerned that they won’t 

be compliant. There may be the last minute where the software 

companies will produce, but then we are concerned about procedures, processes, and testing. 

Chairman LUETKEMEYER. Very good. 

Ms. Evans, title insurance folks normally do the closings on a lot 

of real estate transactions. Is that correct? 

Ms. EVANS. That is correct. Yes, sir. 

Chairman LUETKEMEYER. Under the new proposal, is that regimen going to change, or is this going to be the same, or what do 

you foresee happening? 

Ms. EVANS. I think the processes could change. That is part of 

the reason why collaboration and discussion and education is so 

important, and the hold harmless period allows us to work through 

those issues to make sure that in working with Ms. Lowman’s 

bank, we may do it one way, and working with the next bank, it 

may be different. But we need to make sure we have the opportunity to engage in that dialogue and make sure we understand 

that so the home buyer isn’t interrupted in his transaction. 

Chairman LUETKEMEYER. To me, it is a concern because if there 

is not consistency here, if there is not something that is done a certain way most of the time, that leaves the possibility for problems 

to be there. And, to me, this is a moving target here. And I assume 

that you have some plans for that. 

Ms. EVANS. The new rule specifically has put forward forms and 

put forward some timelines that we must comply with, but it still 

recognizes the role that title and settlement agents have in the 

process and has encouraged us to continue to work with our bank 

and lending partners to determine what is the best process for the 

consumers in our marketplace. 

Chairman LUETKEMEYER. Thank you. 

One more quick question before my time runs out here. And you 

can probably just give this a really quick answer. 

You made a comment during your testimony that consumers 

don’t know the cost of title insurance. Can you elaborate on that 

just a little bit? 

Ms. EVANS. Yes. I am happy to. Thank you. 

The rule has a ridiculous and inaccurate formula for which to 

disclose title insurance rates to the consumer, and it in fact is 

wrong in about 43 States and totally inaccurate in 26 States. And 

we would ask that the CFPB correct that calculation and remove 

the formula from its rule, because if we just disclose the actual cost 

of the title insurance product, the problem is solved and consumers 

know the answer. 

Chairman LUETKEMEYER. Thank you very much for your testimony. I am out of time. 

12 

With that, I will yield to Mrs. Beatty, the ranking member today, 

for 5 minutes. 

Mrs. BEATTY. Thank you, Mr. Chairman. 

And thank you to all our witnesses for being here. 

Certainly as I look around this committee room, I imagine that 

probably more than half of us have participated in that mortgage 

loan closing process, and we have sifted through the hundreds of 

pages and provided countless signatures because we want part of 

that American dream, to be a home buyer and to own a home. 

As you heard from me earlier, I have heard from my REALTORS®, and they don’t want to necessarily change or challenge it, 

they just want that hold harmless period. They have expressed to 

me that a possible gridlock on the transactions could occur if the 

rules are implemented before they are given a chance to fully understand them, to come into compliance, to be trained. 

Ms. Lowman, can you walk me through a closing process under 

CFPB’s TILA-RESPA disclosures and highlight what you anticipate 

could cause hiccups in the mortgage loan process? 

Ms. LOWMAN. From what we understand, the biggest changes 

that are being proposed for the August 1st new rules have to do 

with the lockdown of the transaction 3 days prior to the loan closing. The lender is at 100 percent liability for what is on that closing disclosure. For those of you who have bought a home, you will 

know that in a lot of cases there are numbers that are changing 

within hours before the closing. That can’t happen anymore. If 

something changes, it stops the closing and pushes it back out 3 

more days at minimum. 

So those are the concerns we have in working with our partners, 

the REALTOR® community, and ALTA groups, that we are 100 

percent responsible. So therefore, we are going to have to lock that 

document down. 

Mrs. BEATTY. Okay. Mr. Polychron, in Ms. Goodman’s written 

testimony she stated that without a hold harmless period or a 

grace period, the severe consequences for errors under the TILARESPA may cause lenders to reduce originations, ultimately harming the borrowers it was designed to help. Do you agree with this 

assessment? 

Mr. POLYCHRON. I do agree with it, and in this period we certainly don’t need fewer lenders making money. Our inventory, our 

loan process is difficult enough right now with credit scores, et 

cetera, to put this extra burden upon it. 

Mrs. BEATTY. Ms. Evans or Ms. Goodman, can you comment on 

what the grace period from CFPB’s TILA-RESPA disclosures based 

on good faith compliance efforts would allow REALTORS® to accomplish? 

Ms. EVANS. What it allows is for everyone in the real estate 

transaction, all the real estate professionals, to really work through 

real-life transactions to understand where there might be bumps in 

the road, where there might be delays that would cause a home 

buyer concern, and also recognize that we can work out those systems without the fear of any kind of enforcement or penalty. 

Ms. GOODMAN. Just to elaborate a little bit more, it is important 

to realize, as Ms. Lowman said, the systems are just being delivered now. In many cases they still have to be integrated with loan 

13 

origination systems. And in many cases either you can’t do certain 

products or there is a heavy manual feature. 

So the possibility of errors is very, very large in the early months 

on all sides. And in addition, there are parts of the CFPB rules 

that are a little bit unclear. And this just gives you time to both 

clarify and work out and test the system’s bugs. It is really, really 

important to get this done. 

Mrs. BEATTY. And lastly, since your customers are our constituents, let’s just assume this doesn’t happen, you are not given the 

grace period or the hold harmless. What happens to me as that 

home buyer coming in? 

Ms. LOWMAN. The idea that you would sense nothing is happening to you because we are still trying to deliver a mortgage to 

you for your home purchase. 

The risk is that after 50 years and the combination of RESPA 

and TILA, there now are civil penalties that are going to go along 

with mistakes. In my world, working with my regulator, if I make 

three errors in a row that is considered pattern and practice and 

I can be fined for that. Those are the risks to my business, not to 

the customer, but to my business, and ultimately, then, to my customer if we can no longer operate efficiently and have to change 

those costs for our customers. 

Mrs. BEATTY. Thank you. 

Chairman LUETKEMEYER. Thank you. 

Next up is the distinguished gentleman from Georgia, Mr. Westmoreland, for 5 minutes. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

First of all, I just want to make a couple of comments, and I say 

this to most of the witnesses who come here, with the unintended 

consequences of what Dodd-Frank has created, and specifically the 

CFPB. In fact, a lot of us who were not on the committee when 

Dodd-Frank was passed feel kind of like that guy in the circus 

walking behind the elephant with a broom and a shovel. And the 

elephant is Dodd-Frank, and we need to get rid of that elephant. 

I was in the real estate business for over 20 years. I have been 

to many, many, many closings. And I have bought things myself. 

And the majority of the time the purchaser wants to know how 

much money he has to have, he wants to know what his note is, 

possibly the interest rate, and that is it. 

So when I started selling real estate, you could have a one-page 

contract. And now I think they are going to get to the point where 

you are going to have to give the buyer an IQ test to see if he is 

smart enough to even go to closing. We need to be giving an IQ test 

to some of these people at the CFPB who are making up these 

rules, who have never sold a piece of real estate. They have never 

made a loan. They have never written title insurance. They have 

never experienced this. Some of the things that you have mentioned are just a little bit of the collateral damage that is going to 

happen. 

And I will say this, in the hundreds of closings I have been to, 

I have never seen the interest rate change, the note change, the 

price of the house change. There may be some adjustments in some 

tax escrow or something, but not really anything to affect that sale 

that would cause you to have to put the paperwork back for anVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
14 

other 3 days to mail off to get somebody to look at it. That is insanity. 

Part of the real estate industry, what we made, was the fact that 

everything had to be disclosed between the buyer and the seller. 

But even in this case, as I understand the rule, the buyer would 

have to do a handwritten note explaining the differences in this 

and send it back. This is pure stupidity. I mean, stupidity. And in 

fact, I would encourage the CFPB, before they make any of these 

other rules, to have some people who are actually doing this business come in and say: Hey, how can we make this simpler on the 

buyer? I promise you this whole deal was intended to make it simpler for the buyer. 

If you want to make it simpler for the buyer, don’t have him sign 

stuff where he waives his rights away or is just doing something 

to make sure he has signed a paper to say that he understands the 

last paper he signed. And then after he signs that, he will sign one 

that said: I understand the last three papers I have signed. That 

doesn’t make him understand what is going on. 

And so it is a good real estate agent, it is a good mortgage person, it is a good attorney, those are the people who make that customer understand what he is doing. And I think you all do a very 

good job of it. 

Now, I will ask a question. 

Ms. Lowman, the CFPB’s whole reason for this was consolidating 

it to streamline it for paperwork. Do these new forms in any way 

that they are designed give borrowers a more accurate picture of 

what they are doing? 

Ms. LOWMAN. No, sir. If I had been a part of the original transaction, I wouldn’t have to explain it today as a first grade story 

problem where the information is fragmented through the report. 

I have to train my closer to be able to make sense of that to the 

borrower. I have to train my closer how to explain what a TIP is, 

and it is not a restaurant, it is the total interest paid, and why that 

is important for the consumer to understand. 

Mr. WESTMORELAND. So it is not simpler, it is not less paperwork. It is really more complicated. You feel like from the experience that you have we have made it more complicated than simpler. 

Ms. LOWMAN. Yes, that is what I believe. 

Mr. WESTMORELAND. Thank you. And I think that would be true 

to all the witnesses up there, is that we have taken something and 

made a mess of it. And we are just really good at that. So hopefully, we will be able to postpone this ruling. 

Thank you. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, we go to the distinguished gentleman from Minnesota, 

Mr. Ellison, for 5 minutes. 

Mr. ELLISON. Mr. Chairman, Ranking Member Beatty, thank you 

very much. 

And also thank you to all the panelists. We really appreciate 

your help, and all the information you share with us helps us make 

hopefully better decisions. 

Ms. Goodman, one of your fellow panelists, Ms. Lowman, offered 

her views on whether this change, this consolidation, would be of 

15 

benefit to the consumer. She doesn’t think that it will, and I respect that based on her experience and study. Do you share the 

same view? 

Ms. GOODMAN. No. I actually think it will be beneficial to the 

consumers at the end of the day. When they walk in for closing, 

they will know exactly what those closing costs are going to be, 

which is an assurance they don’t have under the present system. 

I think it really does help improve the consumer experience, but it 

only helps if it is implemented properly. 

Mr. ELLISON. Thank you. 

In due respect to all the panelists, I just want to make sure that 

the people who are watching this know that there are at least two 

sides to the story. I think that is just fair. 

Ms. Evans, I would like to learn a little bit more about ALTA’s 

membership. How many of ALTA’s members are engaged in what 

RESPA would define as affiliated business arrangements? 

Ms. EVANS. Thank you, sir, for that question. 

We don’t know. That is not data that we capture. We capture the 

identity of those members who provide title and settlement services. 

Mr. ELLISON. Okay. So let me ask you just a follow-up, in order 

to neutralize advocacy efforts for a trade organization, I have to 

imagine that the number of impacted members who identify as affiliated business arrangements must be a significant number. Is 

that right? Without asking a numerical specificity, is it a good 

number? I don’t know. Would you say half? What would you estimate? 

Ms. EVANS. I really don’t have actual figures on that. 

Mr. ELLISON. Okay. 

Ms. EVANS. But I do not believe half is accurate, sir. 

Mr. ELLISON. What would you say? 

Ms. EVANS. I would say it is far less than that. 

Mr. ELLISON. Twenty-five percent? 

Ms. EVANS. I really don’t know, sir. 

Mr. ELLISON. Mr. Polychron, do you have a view on this? 

Mr. POLYCHRON. I saw that statistic at one time, and I know it 

is less than 50 percent. I think it is closer to 25 percent than 50 

percent. 

Mr. ELLISON. Ms. Lowman, did you have a thought on this? 

Ms. LOWMAN. Only that TRID does require, if you have an affiliate business arrangement, that it is 100 percent zero tolerance. 

Mr. ELLISON. Okay. 

Going back to Ms. Evans, I noticed in your testimony you note: 

‘‘The majority of our members are small businesses with the average title agency earning $156,000 in gross annual revenue and employing 3 or fewer people.’’ So could you tell me, is there any reason 

why ALTA does not keep the information about the affiliated business arrangements? 

Ms. EVANS. It is not a matter of whether you are an affiliated 

business or not to qualify for membership with ALTA. We represent the title insurance industry. 

Mr. ELLISON. Okay. And I appreciate that. Is that information 

you could perhaps, if you had the time, share with me later on if 

I were to submit a question to you? 

16 

Ms. EVANS. We would certainly consider it. It is not anything 

that we even capture. So we would have to go back and determine 

if that is an appropriate inquiry to make to our membership. 

Mr. ELLISON. Okay. Thank you. 

Iwould also like to ask you a little bit about financial benefits for 

referral. Under RESPA, it prohibits financial benefit for referral. 

Yet there are so many ways that REALTORS®, homebuilders, 

lenders, and mortgage brokers benefit from a referral—a way that 

is currently legal, a shared ownership interest, and ways that are 

currently illegal but practiced, lower desk rents or bonuses for REALTORS®, special event tickets, things like that. 

We would be a little surprised to learn that dentists could receive 

a benefit from referring a client to an orthodontist or that a lawyer 

could receive a financial benefit by referring to another lawyer. In 

fact, for both of those, doing so could get you into some difficulty, 

depending. 

So Ms. Evans, could you share with me why referral sources 

should be allowed to receive benefit or payment for the referral of 

settlement service businesses? 

Ms. EVANS. Sir, I believe that RESPA very strictly prohibits the 

payment of a thing of value or the giving of a thing of value in exchange for the referral of business. And the enforcement of RESPA 

we are continuing to see today, both at the CFPB level and at the 

State level through our State regulators. So it should not be tolerated and is not permitted, in my opinion. 

Mr. ELLISON. Thank you, ma’am. 

Do you think the overall costs of a referral as those are used in 

the affiliated business arrangement business structure is included 

in the cost of operating a title insurance company? 

Ms. EVANS. RESPA clearly permits an affiliated business arrangement under certain circumstances with very set guidelines. 

And so, there is no reason why it should be disallowed. It must 

comply with the standards set under the law. 

Mr. ELLISON. I have gone over my time. 

Thank you very much, Ms. Evans. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, we go to the distinguished gentleman from New Mexico, who is also one of the co-sponsors of H.R. 2213, Mr. Pearce, for 

5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. I appreciate it. 

I would like to ask unanimous consent to submit a letter from 

16 different agencies or different groups who support H.R. 2213. 

Chairman LUETKEMEYER. Without objection, it is so ordered. 

Mr. PEARCE. Thank you, Mr. Chairman. 

Also, I would draw to the attention of the Members here that a 

small title group in my hometown just recently called in the last 

week saying that it had to spend $100,000 on a program to try to 

implement this new regulation, and they are not sure that is going 

to do it. For a small company, that is extraordinarily difficult. 

Ms. Evans, I was absolutely pleased to hear that you say you 

don’t track that information that was being requested by my colleague. Now, keep in mind that we watched the NSA track every 

darn thing for every individual in the whole country, and so they 

are probably going to call us and tell us the answer to all the quesVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
17 

tions that we just heard. But I am glad that you are not tracking 

it because I think that the government knows enough about us already, frankly. 

Ms. Evans, if you were going to speculate, would the larger title 

companies or the smaller title companies be more disadvantaged by 

the coming rules? 

Ms. EVANS. I think we are going to share that pain equally. It 

actually depends on, as Ms. Lowman said, the ability for our software providers to provide us the services and the systems that we 

need. But it also relates to the markets that we do business in and 

the banks and lenders that are our customers in those markets. 

Mr. PEARCE. Having been a small business person myself, I 

worry at the number of small businesses who can afford $100,000 

software. I will just tell you that. And when businesses start closing down, I know where they are going to close down first. They 

are going to close down in the smaller communities first, and someone from outside is going to come in and service that, and now you 

have lost contact with your customer base. And I just see disadvantages for the smaller places, for the poorer places. 

Obviously, the lower the income levels, then the less attractive 

that is going to be to outside providers. And so I worry about the 

loss of jobs in areas like New Mexico, because we have a lot of 

small communities, a lot of communities under 25,000. And so I 

worry about that. 

Have you all done any studies on the pressures that would cause 

companies to close? 

Ms. EVANS. We haven’t done exact studies, but we have talked 

with many of our members across the United States that are exactly like you describe in your local communities, and they are very 

concerned about the ability to continue to serve consumers, home 

buyers, and sellers in their markets and making sure that they 

have the systems and the financial stability and are able to go forward. 

Mr. PEARCE. Ms. Goodman, I really appreciated your testimony. 

I thought that it came across covering both sides of the issues very 

well. And I will tell you as one of the Republicans, I was a little 

alarmed when you said you were going to take aim at the elephant 

in the room. And so other than that, I was okay with it. But all 

right. I took a while to catch on there. 

Ms. GOODMAN. Thank you. 

Mr. PEARCE. Again, as a small State, I worry, and I really appreciate your comments on GSE reform. That is kind of where I would 

like to track toward, as again in a small State, the manufactured 

housing is 50 percent of the houses sold in my district. And so I 

worry that the secondary market, the private market, would actually get out and service these. 

Have you all done any studies on the privatization and the private sharing of risk? I am not trying to put words in your mouth. 

Have you all done any studies about that? 

Ms. GOODMAN. We have done a lot of work on risk sharing between the GSEs and the private markets, and we have done a lot 

of work on credit availability. And one of our concerns is that those 

being squeezed out of the market now are those borrowers with 

18 

lower credit scores, and disproportionately include those living in 

manufactured housing. 

Mr. PEARCE. Yes, that would be my worry. 

Ms. GOODMAN. We have not done anything explicitly on manufactured housing, although we have done a lot of work on credit availability. But that is an interesting topic to add to our research agenda. Thank you. 

Mr. PEARCE. I’ll tell you what, if you would like to come and visit 

our office, I would like to dig into this a little deeper. If we had 

the capability to do it ourselves as an office, we already would 

have. It is just very complex. And I, again, appreciated your testimony and would invite you— 

Ms. GOODMAN. Thank you. I accept. 

Mr. PEARCE. Okay. 

Ms. Lowman, you had mentioned the risk to your business if you 

make bad disclosures. Can you tell me a little bit more about that 

risk and how it pyramids up or down or whichever way pyramids 

go? I don’t know exactly, not coming from Egypt. 

Ms. LOWMAN. It will get broader at the bottom, I can tell you 

that. 

What we have seen since 2010 is a zero tolerance in compliance. 

And the compliance, again, doesn’t impact the consumer directly, 

it impacts my business and that of all the mortgage lending industry. And I think it was intended to improve the delivery of information to the customer, but the measurement now is that you can’t 

make a mistake. For an example, if I disclose to a customer an incorrect title insurance fee, I eat the difference if it is wrong. That 

is the new rule. 

Mr. PEARCE. Yes. So that zero tolerance ought to work backwards toward the government regulators. 

I have extended past my time, Mr. Chairman. Thanks for your 

tolerance. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, we go to the gentlemen from Texas, Mr. Williams, for 

5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

And I want to thank all of you for being here today. This is great 

testimony. We appreciate it. 

I am a small business owner. I am from Texas. And I can tell 

you that regulations are killing Main Street. You all are Main 

Street. I am Main Street. The CFPB, as I believe you have heard 

some of my other colleagues say, is not a friend of Main Street and 

is doing a lot of harm in America. And in full disclosure, I am a 

car dealer. So I feel your pain. 

My question for Ms. Lowman is, in your testimony you discussed 

third-party compliance systems and that vendors will deliver these 

in stages, and many of them will not be ready by the August 1st 

deadline, which we have talked about. 

As a result, these lenders, especially the smaller financial institutions, will have to halt their mortgage lending business, as we 

have heard. And I can tell you in some of the rural parts of my 

district in Texas, the CFPB is already regulating them out of the 

mortgage market. 

19 

Personally, I think you are starting to see what I would call a 

forced consolidation of these banks. I know it is happening in Texas 

because in Texas alone, where we think we have the greatest economy in the world, we have still lost 115 community banks since 

2012. 

Look, that is what it is all about. I really think protecting these 

small institutions who can barely afford to comply with this new 

law and can’t afford to be held liable should they get it wrong, we 

hear all the time that community banks and lenders are hiring 

more compliance officers than they are lending officers, and that is 

just wrong. 

So going back to my question, Ms. Lowman, what might the fact 

that the products that are not going to be ready, how will they affect the bank as a whole? You have talked a little bit about that, 

but tell us again. 

Ms. LOWMAN. Part of my market in west Michigan, and we feel 

we have a very strong market as well, is the service of zero lending 

to low- and moderate-income folks. Rural development is one of 

those very good products that we use which comes from the USDA. 

And we will not have those documents ready. I have already been 

told by my software partner that is on the last part of their upgrades. If I can’t do rural development, I can’t do 100 percent on 

lending for the low- and moderate-borrower. 

Mr. WILLIAMS. So who is affected? The customer again. 

Ms. LOWMAN. The customer. 

Mr. WILLIAMS. By big government getting involved. 

Second question, how might a bank make up for the lost business? You are going to have lost business because you can’t sell the 

product, right, because you are not ready for it. How are you going 

to make up for that lost business, those lost profits? 

Ms. LOWMAN. We are all in business, and we are a for-profit 

business, but I have done some studies just since the Dodd-Frank 

Act. It takes me 3 hours longer for every applicant. I think the customer is the one who is suffering in the long run. We can’t get to 

all of them, which means that some folks are not going to be able 

to do their mortgage with their local lender. 

Mr. WILLIAMS. Because of the overreach of the heavy hand of 

government, you are going to lose some profits probably because of 

your inability to reach out to everybody. 

Now, would the same lenders have to raise costs on consumers 

to make up for the mortgages they couldn’t make until their systems were in place? 

Ms. LOWMAN. We have done some studies on that through the 

ABA, and 5 years ago it cost about $5,000 all-in cost to do a mortgage. We have anticipated that by the end of 2016, it is going to 

be over $9,000 to do that same mortgage for the consumer. 

Mr. WILLIAMS. So there again, the consumer is affected. 

I still have some time. My question would be for you, Ms. Evans. 

It is nice to see you again. Thank you for being here. What are you 

seeing in the overall title insurance market as a result of this legislation? For example, I would say, do you see consolidation in the 

market or are small businesses thriving in this regulatory environment? 

20 

Ms. EVANS. They most certainly are not thriving. They are struggling. And there is discussion of consolidation. There is discussion 

of some closures because of the simple inability to comply with 

overregulation and the burdens placed upon them. 

Mr. WILLIAMS. So it affects competition? 

Ms. EVANS. It absolutely affects competition, which directly affects the consumer. 

Mr. WILLIAMS. The consumer, again, is affected by the heavyhanded overreach of government? 

Ms. EVANS. Yes. 

Mr. WILLIAMS. Ms. Lowman? 

Ms. LOWMAN. Can I share one thing on that title insurance 

piece? One of the comments that Ms. Evans made earlier about 

how TRID is regulating how we disclose that, right now we have 

what we call a simultaneous issue policy, where borrowers get to 

have a savings when we do the owners policy and mortgage policy 

with the same company. 

Under the new rules, because we have to disclose the full cost 

and we can’t disclose simultaneous issue, most companies now are 

stopping simultaneous issue. I did some studies on a $100,000 loan, 

which costs the borrower $200 on a $250,000 loan. That costs almost $300 in that savings they will not be able to experience because the title industry is saying we can’t offer it. 

Mr. WILLIAMS. The American Dream gets further and further 

away. 

Thank you, Mr. Chairman. I yield back my time. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, we will go to the gentlelady from Wisconsin, Ms. 

Moore, for 5 minutes. 

Ms. MOORE. Thank you so much. 

And I want to apologize to the panel for not being able to attend 

earlier so that I could hear some of your testimony and some of the 

other questions. So you must forgive me if I am redundant in any 

way. Thank you for joining us. 

I have a couple of concerns. We could start out with the August 

1st, 2015, deadline for the new real estate settlement procedures 

and truth-in-lending forms, the merged form. I am on a letter with 

Mrs. Maloney to delay implementation of this because there is a 

concern on the part of many of us that this is just not enough time 

in the real estate season to give them time to really comply with 

the new requirements. 

Now, Mrs. Maloney is one of the more strident supporters of the 

CFPB, so I know that she is not suggesting that, to stop the CFPB 

from this activity. But I just wanted the panel’s opinion on whether 

a delay was possible and what impact do they see that this would 

have? 

Ms. EVANS. Thank you for your question. I actually had the opportunity to meet Director Cordray yesterday afternoon, and I 

posed that very question and urged him to consider a delay in enforcement, a hold harmless period, because we really do need to 

test this process, test these forms, and make sure that consumers 

aren’t harmed in the transaction. 

He told me, as I think he presented in front of the REALTORS® 

organization earlier this week, that he is still listening. So I think 

21 

any encouragement from all of you helps further the case that consumers need to be assured that their transactions will move forward as we implement these new forms in this new process. 

Ms. MOORE. Okay. Thank you for that. 

The other question I had, and maybe Mr. Polychron might be the 

best person to ask this question, is in regard to FHA loans. Many 

modest-income borrowers and low-income borrowers find themselves needing to go to the FHA for their financing because they 

don’t have the 20 percent downpayment. 

And we have heard concerns from some realty groups, including 

the REALTORS®, that the requirement that borrowers amortize 

the mortgage insurance payment over the entire life of the loan 

means that the poorest borrowers will be paying much more for the 

loan. And it doesn’t seem to have any nexus with added risk factors 

versus the private mortgage insurance that would phase out earlier 

and be less expensive. 

What are your thoughts are on that? 

Mr. POLYCHRON. Are you speaking in reference to the downpayment being high? Because you started off with the downpayment. 

Ms. MOORE. What I am saying is, if a person is getting an FHA 

loan and the FHA mortgage insurance is amortized over the entire 

length of the loan versus being phased out at some point, it prevents a borrower from developing any equity in the property. And 

this is a rule that has been put in place, and I am wondering if 

this is an unintended consequence, in your opinion. 

Mr. POLYCHRON. Yes. Some other things happened to perhaps 

offset that. The mortgage premium was reduced from 1.35 down to 

0.85, which lowered the average home that sold through FHA approximately $90 a month. So even though some other things 

changed that might affect it negatively, I think overall with the 

downpayment being lowered again to 3.5 percent on FHA loans, I 

think the product has become much more attractive to all— 

Ms. MOORE. Any other observations about this in my 4 seconds 

from the other panelists? 

Ms. LOWMAN. I deal with conventional primarily because of that. 

We are regulated on the requirement to reduce or take the entire 

PMI premium out of the transaction at 78 percent. The FHA, the 

new rules do have a 100 percent MI coverage for the life of the 

loan. 

Ms. MOORE. My time has expired. I don’t know that I got the answer, but thank you. 

Chairman LUETKEMEYER. Thank you. 

With that, we go to the gentleman from Pennsylvania, the distinguished gentleman, Mr. Rothfus, for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

It is kind of hard to see folks from up here with the new setup. 

For the panel, I have talked with a popular real estate company 

back in my district a bit about the TRID rule, and they do expect 

to have technology ready to comply by the August 1st deadline. 

This particular company is going to be ready. However, they noted 

that the large number of settlement service providers they work 

with also need to be ready if they all want to do business together. 

22 

Could the panel please elaborate on the interconnectedness of 

real estate transactions, what could happen if one component in 

the process is not ready with the needed systems and technology? 

Ms. Lowman, would you like to start? 

Ms. LOWMAN. I will start out, only because the closing disclosure, 

which is the new part of TRID, is 100 percent our responsibility. 

In the past, settlement done by the title company, we collaborate 

the numbers, they can change right up until minutes before closing. And under TRID, that cannot happen anymore. It is locked 

down 3 days before, which means we have to collaborate with our 

title companies about 5 days before closing. And when you buy a 

home, there are expenses and things that happen in that week before closing that we can no longer allow to happen. 

So that is going to be one of the biggest challenges of the new 

TRID rule, the lockdown of that closing disclosure. We have spent 

the last several months sitting down with our vendor partners, including the title company and the REALTOR® community, asking, 

‘‘How can we do the best job to be where we have to be on August 

1st?’’ We don’t have all those answers yet. 

Mr. ROTHFUS. Anybody else want to comment on the interconnectedness and the impact of one entity not being ready? 

Ms. EVANS. Thank you. And that absolutely is true. It is critically important that we all are able to share data directly with one 

another and to make those changes and make it very timely and 

seamless so that the timeframe set forward in the new rule can be 

met so that the loans can close without delay. But that last-minute 

change, that need to prorate the gas that is in the propane tank 

or adjust the homeowners association dues, all those last-minute 

issues that come up are going to be much more difficult to do, and 

that integration will be critical to accomplish that. 

Mr. ROTHFUS. Thank you. 

Mr. POLYCHRON. And if I may, ultimately, my client, my couple 

who is sitting at that closing table, when they find out they are not 

going to be able to close, has to provide themselves for more perhaps rental payments, higher interest payments, moving vans that 

are sitting there full of furniture that is going to cost more. So 

there are going to be incurred costs that they wouldn’t normally 

have as well. 

Ms. GOODMAN. Just to add one more thing, and that is the sheer 

number of vendors that has to be coordinated is just incredible. It 

is mortgage brokers, the title insurance agents, attorneys, closing 

or settlement agents, and pest inspectors. It is incredible. 

Mr. ROTHFUS. Thank you. 

Ms. Lowman, have there been other regulations that you recall 

where technology hasn’t been ready at the deadline for implementation and where Federal regulators provided some relief to industry to ensure that they were not going to be adversely harmed? 

Ms. LOWMAN. Do I understand the question to say the technology 

piece? 

Mr. ROTHFUS. Yes, to comply with a certain regulation by a certain deadline, if technology wasn’t ready. Do you recall other instances where the technology just wasn’t ready yet and the Federal 

regulators provided some relief? 

23 

Ms. LOWMAN. In my 30-year career, in just the mortgage business, there has never been an issue with the technology piece. It 

has usually been about processes. 

Mr. ROTHFUS. Thank you. 

There will be glitches when TRID goes into effect on August 1st, 

especially since there currently is no testing phase. What are some 

challenges industry participants will face that might have been unaccounted for by the CFPB? Anybody on the panel want to address 

that? 

Ms. EVANS. Sir, thank you. I think that is a really good question, 

and I think that is part of the reason why the delayed enforcement 

is so important, is because we don’t necessarily know exactly what 

those issues may be. 

Under the current rule, the buyer/borrower risks losing their earnest money if closing doesn’t occur in a timely manner. And the 

CFPB has acknowledged through their statements that they don’t 

believe that a loss of earnest money is a financial crisis for a buyer. 

I have to tell you, in my world, as I close transactions, whether 

that earnest money is $1,000 or $10,000, the loss of that to a buyer/ 

borrower is huge, and the consequence is a financial— 

Mr. ROTHFUS. That is a significant number. 

Ms. EVANS. Yes. 

Mr. ROTHFUS. Thank you. 

I yield back. 

Chairman LUETKEMEYER. Thank you. 

With that, we go to the gentleman from Texas, Mr. Green, for 5 

minutes. 

Mr. GREEN. Thank you very much, Mr. Chairman, and I thank 

the ranking member as well. 

Not having been here for the entirety of the hearing because of 

other duties, I may ask a question that has already been answered, 

so please tolerate me to the extent that you may. 

Integrated disclosure, is there anyone among you who is opposed 

to the integrated disclosure? If so, would you kindly extend a hand 

into the air or simply say so. Anyone? All right. 

Now, the time period that we are discussing is about 5 months. 

Is that enough time to make the transition? 

Ms. GOODMAN. It is clearly not. I think you can argue that lenders really had 21 months, but they didn’t, because every system 

was dependent on every other system. So the systems that are 

being delivered to Ms. Lowman were in turn dependent on MISMO, 

which is the mortgage information and data system. That was in 

turn dependent on Fannie and Freddie with their uniform disclosures, which required updating. There are 899 data elements in 

that, some of which had to be updated. So there was sort of a sequencing. 

We are getting to the end and the timeline is very, very tight. 

So while systems may be mostly in place, they won’t be fully integrated. There is going to be a huge manual element. And the people at the end of the line who are going to suffer are going to be 

consumers with delayed closings. 

Mr. GREEN. I think, Ms. Lowman, you were about to give a comment as well? 

Ms. LOWMAN. I would echo her comments completely. 

24 

Mr. GREEN. Well, permit me to ask, what would be reasonable, 

in your opinion? 

Ms. LOWMAN. From my perspective, working with my software 

company is the most strategic part of implementation right now. I 

am still waiting to get to that stage. 

Once we have the software in place and we start testing, I have 

to pull people out of the field, which means consumers can’t get to 

their mortgage person for an application, and spend the time training them. And I was looking towards about a 60-day training period, and I won’t be able to start that until the end of June at this 

point. 

Mr. GREEN. Moving to another topic, Ms. Lowman, Mr. Ellison 

was asking questions about affiliates and you were about to make 

a comment about 100 percent zero tolerance. I didn’t quite get the 

gist of what you were going to say. Would you kindly explain? 

Ms. LOWMAN. If a bank is working with an affiliated title company that they may own, TRID says that we have no tolerance for 

error. So the dollar amount that we put on the early disclosure to 

the customer, primarily because it is an affiliate of the bank, we 

cannot have any number other than what we close with. There is 

no ability to change that. 

Mr. GREEN. And the final question that I would ask has simply 

to do with the utilization of the time if we have a hold harmless 

period. Would you care to explain to me how this time would be 

effectively used? 

Ms. EVANS. Thank you, sir. That time would be used to use these 

new forms, use the new process in real-life transactions to make 

sure that we all have it right and that we are able to timely close 

consumers’ loans and make sure that there aren’t unintended consequences as a result of this new process. 

Mr. GREEN. Anyone else? 

Mr. POLYCHRON. I kind of like to compare it to the NFL. They 

play preseason games that don’t count against them, and then all 

a sudden when the day gets there, they play for real, and that is 

what I would kind of like to see happen as well. 

Mr. GREEN. Thank you very much. I appreciate your analogy. 

Thank you, Mr. Chairman. I will yield back. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, we go to the gentleman from Kentucky, Mr. Barr, for 

5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

Ms. Evans, I appreciated your testimony regarding your conversation with Mr. Cordray yesterday, and I am happy to hear that 

he said that he would be listening and continuing to listen in advance of August 1st. 

My question to you is, do you expect the CFPB to make any 

changes without a congressional intervention based on your communications and industry’s communications with the Bureau? 

Ms. EVANS. I think I would be speculating if I said yes or no to 

that. But what I do feel confident in is that any kind of encouragement or action that you all would take to help move the need for 

that change forward would certainly go a long way. 

Mr. BARR. To that point, as you may know, I am leading a letter 

and sending a letter to the Bureau with my colleague, Mrs. MaloVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
25 

ney from New York, to encourage the Bureau to give you all that 

preseason, if you will, so that you can test all of the new procedures. 

The goal of this new integrated disclosure, of course, is to simplify the process of closing. And yet we see that the regulation 

itself is a 1,888-page rule in and of itself. My question to anyone 

who would like to answer is, do you think that 1,888 pages of regulation is too much or too little guidance? 

Ms. Lowman, since you smiled? 

Ms. LOWMAN. There is a lot of minutiae in there that we are still 

trying to figure out how that impacts the numbers that we provide 

for our customers. And as we have read it and had our attorneys 

read it, we have spent a lot of time trying to figure out what that 

exactly means to every bit of the documentation that goes to the 

customer. 

But as we put these rules into play, I think this period of time 

that we are asking for would give us time to try it on, make sure 

it fits right, go back and forth with CFPB to try to get more clarification without the penalty of closing customers down for closing 

where they could lose their rate lock, they could lose the house that 

they are buying, and lose their downpayment. 

Mr. BARR. My understanding is that there are 10 pages of disclosure forms under this regulation: a 3-page loan estimate; a 5-page 

closing disclosure; and a 2-page disclosure to the person selling. Is 

this more complicated, is this a more voluminous amount of paper 

than typical closing under the current law? 

Ms. LOWMAN. We had some sweeping changes a few years ago, 

and that probably was more paperwork than what this is, and that 

locked down tolerances, which was the concern that the consumer 

would get a bait and switch, like it is going to cost you this much, 

but it really costs you this much at the closing table. That all 

changed several years ago. 

And as I said earlier, we have looked at these documents that 

HUD created and that were part of RESPA for a long, long time. 

They are not cumbersome. I think it was the training of people who 

give that disclosure at closing to make sure it is clear to customers. 

And I am not sure we fixed that yet. 

Mr. BARR. I will stay with you, Ms. Lowman, with one other 

question directed specifically to you. What do you see in terms of 

the additional costs to consumers and also just generally credit 

availability impacts as a result of the new integrated disclosure 

rule? 

Ms. LOWMAN. From what I have sensed so far reading it, the impact of credit availability should not change. The amount of available time to work with customers has changed. It has taken us 

much longer to do each transaction, so we can get fewer people 

through the process. That shouldn’t be different from one shop to 

the next, it should be universal. I think that is going to be a big 

impact. And then just monitoring the activity in our shops is costing more money, and if it costs more money to us to do it, it is 

going to cost the customer more. 

Mr. BARR. And I am curious about this 3-day advance requirement and some of the challenges associated with the requirement 

to provide the disclosure 3 days in advance of closing. Can you just 

26 

elaborate a little bit in my remaining time about some of those additional complexities that could be created? 

Ms. LOWMAN. I have a calendar, but it basically says that on the 

new rules, the last loan estimate I can issue to a customer, with 

any changes, whether the customer asks for it or whether the REALTOR® asks for it or the title company changes something, is day 

4. Day 3 before closing is the day we issue the closing disclosure. 

It goes to the customer. It goes to the title company. That is locked 

down. 

If something comes up like homeowners association dues that we 

didn’t know about or the fuel bill that we were talking about earlier, then that stops the 3 days. You have to issue a new 4-day loan 

estimate for the changes and then a new 3-day closing disclosure, 

and now your closing is about 4 or 5 days further out. 

Mr. BARR. Thank you for your testimony. 

I yield back. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, we have our final inquisitor of the day, the distinguished gentleman from California, Mr. Sherman, who is also the 

cosponsor of H.R. 2213. He is recognized for 5 minutes. 

Mr. SHERMAN. Thank you, Mr. Chairman. I served for so many 

years on this subcommittee, and I want to thank you for allowing 

me to participate in this hearing even though I am no longer one 

of your members. 

You know, I cosponsored Dodd-Frank. I think no one else in the 

room can say that at the present time, for different reasons, I 

would argue, for different reasons. I know, for different reasons. 

And the plan for the CFPB was they wouldn’t have to listen to the 

appropriating committee. They are the only agency in government 

I can think of that doesn’t have to listen to the appropriators. 

We didn’t do that because we thought they shouldn’t listen to 

Congress. Rather, we wanted both ears focused on the authorizing 

committee, this committee. This is where the expertise resides. And 

even if we didn’t bring expertise there should be a certain respect. 

What is it, honor your father and your mother? We created this 

agency right here in this room before it was redecorated. 

And I like Mr. Polychron’s example comparing it to the preseason. My own example is that this is like a shakedown cruise. 

You build the best ship you can, but you then take it out and see 

how it works. And you expect it to float, you expect it to work, but 

you don’t shoot the captain if it doesn’t work on the shakedown 

cruise. You don’t even subject him to the American trial bar. You 

get the bugs out of it. 

And in this one, I am seeing some bugs, because if I understand 

Ms. Lowman’s testimony and others that I have heard, the slightest little change can delay things for days. So if I was buying a 

house and I found that the water heater needed to be fixed, instead 

of getting the water heater fixed at the expense of the seller, which 

is only fair, I would just say to heck with it, I will fix it myself, 

I won’t tell anybody about it. 

The last thing I want to do is move into the house 5 days after 

the school year begins because I want somebody else, in all fairness, to pay for the—so this idea to start over for $50 items or $200 

items does not help the consumer. But as I understand the testiVerDate Nov 24 2008 12:08 Oct 23, 2015 Jkt 095068 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\95068.TXT TERI
27 

mony here, you are ready to go with this regulation, whatever 

flaws it has, on January 1. Actually, you are going to implement 

it on August 1st, but you just don’t want to get sued for the problems discovered in the shakedown cruise. 

I don’t know why Congress has to push this hard to get that as 

the result. But we do have the Pearce-Sherman bill. We are looking 

for cosponsors. And it shouldn’t take an act of Congress to get a 

5-month period in which you do your level best to follow this new 

law, but you are not going to get sued or penalized during the 

shakedown cruise. 

Mr. Polychron, what I am hearing from REALTORS® in the San 

Fernando Valley is this is already affecting planning for selling 

homes and buying homes, that people are worried if they can’t get 

their escrow open by August 1st that they are going to have problems. People are already planning to just take the month of September and October off, which may be good for them and their families if they are REALTORS®, but not good for my area. 

Are you seeing that around the country? Is the prospect of this 

highly litigious, people-waiting-to-sue situation already affecting 

behavior? 

Mr. POLYCHRON. Congressman Sherman, southerners are a little 

different than people in California. But I will tell you that what we 

are seeing happen is our title companies and lenders are telling us 

to add from 15 to as much as 45 days to a closing to expect it to 

finally happen. So it is still a delayed period, which we don’t like. 

Mr. SHERMAN. And right at the time of the school year where I 

have to move into the house or my kids can’t go to that school, they 

can start 2 weeks late, that is— 

Mr. POLYCHRON. All correct, sir. 

Mr. SHERMAN. Is everybody here—I think you have already said 

this—in favor of the Pearce-Sherman bill? I am seeing nod, nod, 

nod. 

I see, Ms. Goodman, are you nodding or—you are not shaking 

your head. 

Ms. GOODMAN. I am definitely in favor of the hold harmless period. I am not sure that you need to do it legislatively as opposed 

to by urging the CFPB to do it, because I really think it is— 

Mr. SHERMAN. I want to commend Mrs. Maloney and Mr. Barr, 

because they have sent a letter, organized a letter that many of us 

have signed that has encapsulated the wisdom of Ms. Goodman. 

And nothing would please me more than throwing away this bill 

because the CFPB did exactly what Ms. Goodman suggested. 

I believe my time has virtually expired, and I yield back. 

Chairman LUETKEMEYER. As usual, the gentleman from California is very articulate and has great points to make. Thank you 

for your participation in our committee hearing, and you are most 

welcome. 

With that, we have our final questioner of the day, the gentleman from Florida, Mr. Ross, for 5 minutes. 

Mr. ROSS. Thank you, Mr. Chairman. I don’t think I will take my 

full 5 minutes, but I do want to comment that, yes, I too am a cosponsor of the Pearce-Sherman bill and believe that as a lawyer, 

in order to address the potential causes of action, it probably is legislatively necessary. 

28 

But I just want to address this, if I can Ms. Evans, to you, because as a law student some 30 years ago, before we had computers, we would do an abstractive title by going down to the courthouse and doing the chain of title and taking some painstaking efforts to find out that we had a clean title. And then we would look 

and go back to the title company to do the title insurance and put 

in our exclusions. 

If the Pearce-Sherman bill is not implemented, if there is not a 

safe harbor, I foresee some title situations that are going to be very 

painstaking that in and of itself give rise to litigious causes of action or maybe other exclusions that title companies will want to 

put in there. And so I guess from your perspective, what do you 

anticipate to be the impact if we are not able to correct this and 

allow for the safe harbor? 

Ms. EVANS. Thank you, sir, for the question. I think the largest 

impact is going to be on the closing and settlement side. I think 

that the title insurance product, the search and exam, will continue 

to go forward. I think we will be required to make sure that we 

are able to search, examine— 

Mr. ROSS. You will have a conditional acceptance— 

Ms. EVANS. —and provide those products in a shortened period 

of time. 

Mr. ROSS. No, you will have a conditional acceptance essentially 

or a conditional issuance of a title policy that then may give rise 

to an objection of the mortgagee because it doesn’t protect their interest because you are not sure. 

I guess what I am suggesting is that until we get this cleared 

up, and until you—which by the way, I think, has probably one of 

the most significant impacts on a transaction because of the depth 

of the title history—that we have to have that cleared up. And I 

guess what I am concerned about is, you have to protect your interest, and if you don’t do it through an exclusion or a conditional 

issuance, then you do so at your own peril. 

Ms. EVANS. We want to make sure that home buyer’s investment 

is protected— 

Mr. ROSS. Correct. 

Ms. EVANS. —and they get a product that well covers that commitment that they have made to purchase that home. 

Mr. ROSS. I agree with you. And in order to have that satisfaction that you know that home buyer is protected, you need some 

sense of certainty, correct? 

Ms. EVANS. Absolutely. 

Mr. ROSS. Mr. Chairman, I yield back. Thank you. 

Chairman LUETKEMEYER. I thank the gentleman. 

And obviously, things on the Floor have broken down, because 

we are an hour late with votes. So thankfully, and for your benefit 

anyway, that happened. Again, I thank the witnesses for participating today. You all did a fantastic job. 

But I do want to send a message to the CFPB. I think from the 

hearing that we had today, the forbearance period is agreed to by 

all parties, on both sides of the aisle. And I think that if a forbearance period is not granted, it is incumbent on this committee to 

monitor that situation. And so it is my intention to contact all the 

various lender associations and get with them to, if the forbearance 

29 

period is not agreed to, to have them get with us and give us examples of extreme abuses by the CFPB if they pursue this and go 

down this road. 

Hopefully, they will be good stewards of our citizens’ time and 

money and this will not happen, but should they not do that, we 

want to know about that, and we will be in contact with a lot of 

the representatives from the different lending groups to make sure 

that we monitor the situation very, very closely. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

With that, this hearing is adjourned. 

[Whereupon, at 3:32 p.m., the hearing was adjourned.] 

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A P P E N D I X 

May 14, 2015 

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