CFPB Guidelines

Mellex Title’s Commitment To Complying With CFPB Rules and Guidelines

Mellex Title is committed to providing the best service possible to the consumer and our partners. We continue to review our internal policies and procedures to ensure full compliance with the Consumer Financial Protection Bureau’s Rules and Guidelines. We are taking the necessary steps to ensure that your information is secure during the closing process. Encrypted transmissions when sending or receiving information from our partners to ensure the highest protection possible.

Why The CFPB?

Before CFPB was established, seven different Federal agencies were responsible for various aspects of consumer financial protection. Rulemaking, supervision, and enforcement authorities were divided across these agencies. No single agency had effective tools to set the rules or oversee the whole market.

What Is The CFPB?

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) created the CFPB on the premise that a focused, accountable agency should be responsible for consumer financial protection. Congress vested the CFPB with authority under more than a dozen consumer protection laws to write rules, supervise financial services companies, and enforce the law. The CFPB is the nation’s first Federal agency focused solely on consumer financial protection. It started operating in July 2011.

CFPB Rules and New Lending Procedures

On October 3, 2015, the Consumer Financial Protection Bureau’s mortgage disclosure rule – enacted to make it easier for consumers to shop for mortgages and protect them from costly surprises at their closing by integrating consumer disclosures – went into effect. We’re taking the changes brought about by the rule as an opportunity to provide better transparency and service to all parties involved in the real estate transaction.

lmplementing ALTA best practices

In response to the ever-changing regulatory environment, the American Land Title Association (ALTA) published a new set of title agent “best practices,” arming its members with uniform standards to protect consumers, promote quality service, provide for ongoing employee training, and meet legal and market requirements.

Three ALTA pillars of best practices include as follows:

  • Maintain an electronic or hard-copy folder with up-to-date licensing information that is indexed and digitized;
  • Implement written procedures and controls for escrow trust accounts, allowing for electronic verification of reconciliation; and
  • Adopt and maintain a written privacy and information program to protect non-public personal information (NPPI).
  • Adopt and maintain a written privacy and information program to protect non-public personal information (NPPI).
While compliance with these best practices is voluntary, underwriters and title agents who adhere to these high standards demonstrate to consumers that the industry is improving its professionalism. Many responsible title insurance agencies already maintain these kinds of best practices. Nevertheless, the adoption of enhanced best practices, coupled with responsible government oversight, is certainly healthy for both insurers and consumers alike.

Title Agents Must Comply

These new best practices will have big implications for the title industry going forward. Settlement service providers are developing new methods to improve and standardize their practices, ensuring quality and consistency that result in a positive customer experience. Striving to improve the customer experience and promoting regulatory compliance is a win-win all around.

The CFPB’s bulletin says service providers shouldn’t present unwanted risks to consumers. Steps that service providers need to take include maintaining their proper licensing, making sure escrow accounts are properly controlled and making sure that non-public information, which for title companies could include the loan number or social security number of someone receiving a home loan, stays securely private.

Under the law, even if a title company unintentionally acts outside the complicated law, as reform advocates say several are doing now, the bank holding the mortgage could be penalized.

With the new rules going into effect in next year, banks are now applying extra scrutiny to the title companies they work with and discarding the ones that don’t meet the rigorous compliance standards. Title companies are under tremendous pressure to make sure they’re following the rules. Major banks, including JP Morgan Chase, Wells Fargo and Bank of America, have been scrambling to review the third-party vendors they use.

Additional expenses that title companies are expected to bear include the hiring of compliance attorneys and audit staff and the purchase of tracking software to make sure data aligns with new federal reporting requirements and with the information banks have on file. The American Land Title Association, the leading national association for the title industry, has released a best practices study to help its members prepare for the changes. The study is a good resource for title companies as they seek to comply with federal regulations and keep their relationships with mortgage lenders.

More information on Alta Best Practices click HERE

More information regarding the Consumer Financial Protection Bureau click HERE

Click on the video below to learn more about the CFPB’s rules and guidelines that have been put into to place to protect the consumer during the process of applying for and obtaining a loan for a new home.