In its latest quarterly newsletter to settlement agents, Wells Fargo announced its plans for the Closing Disclosure form’s implementation. The company decided, after assessing all requirements and options, that it needs to control the generation and delivery of the borrower’s Closing Disclosure to consistently meet internal compliance and regulator expectations.
In the newsletter, the company said having evidence of delivering the borrower’s Closing Disclosure with receipt at least three days prior to closing is a critical requirement. The data to support this must be readily accessible for internal and external audit, and it believes that this critical compliance evidence can only be provided if Wells Fargo itself delivers the Closing Disclosure directly to its borrowers. For purchase transactions, the settlement agent will continue to be responsible for the seller’s information and will prepare and deliver the seller’s Closing Disclosure. A copy must be provided to Wells Fargo for the loan file to comply with the final rules.
So far, many in the industry don’t seem surprised and were prepared for the announcement.
“I have been following the new HUD proposal for a long while now and have attended many information sessions on the new HUD and the new CFPB best practices that are being implemented next August as well, so I was not surprised by this announcement,” Sojo Title Agency Operations and Title Manager Katie McKinney said. “I feel, with all the requirements being placed on lenders, it would be in their best interest to maintain control since the responsibility ultimately falls back on them.”
Susan Jones, president of Royal Title Services, agreed. She said after more than 25 years in the business, she has seen plenty of changes and nothing surprises her — certainly not Wells Fargo taking the lead on such an important industry issue.
“Wells Fargo is often a leader in making changes and setting policy on a large scale,” she said. “They were one of the first major lenders to abandon their own internal title company and are now one of the first to lay out a game plan on how they plan to steer their ship during the Closing Disclosure form (CDF) implementation. As a title agent, we’re ready to adapt to whatever direction our industry partners choose and welcome whatever role they have for us to play. The bulk of the title and closing talent is within the title agent network, and I’m hopeful that this talent will be utilized to its fullest.”
According to the Wells Fargo announcement, conducting the closing will continue to be the responsibility of the settlement agent, but with increasing focus on compliance with its closing instructions.
With Wells Fargo leading the way, Jones and McKinney think many other large lenders will adopt similar policies.
Judy Wheatley, senior vice president for compliance at Indecomm Global Services, agreed. She works with residential mortgage lending clients and said because of the number of mortgages Wells Fargo originates each year, mortgage lenders will take notice of its position on industry matters and often adopt similar processes.
“The new Closing Disclosure as required by the TILA-RESPA Integrated Disclosure Rule does have a significant impact on the closing process and will bring big changes in the tasks performed by lenders and settlement agents,” Wheatley said. “The burden is on lenders to comply with the rule, but lenders will not be able to comply and ensure mortgage transactions close on their anticipated closing dates without the full cooperation of their settlement agent partners. I think the new rule will strengthen the relationships between lenders and settlement service providers as they act together in the best interest of customers.”
It would be unlikely that lenders, of all shapes and sizes, would follow this exact model, according to Jones. She said it would be difficult to make a perfect one-size-fits-all plan for the implementation. No matter how the lenders decide to move forward, however, she said she sees an opportunity for title agents to garner more business.
“With our skill set and years of expertise, we have the talent to meet a wide variety of customer needs and can adapt quickly to those needs,” Jones said. “Initially, we’ll all be feeling our way around the process and it will probably be a bit clumsy. In the past, once we have gotten through the learning curve and growing pains of industry changes, we all became pros and adapted to make the process run smoothly. We’ll approach these changes in the same way.”
“I really don’t feel like it is going to be a major impact on the title industry,” McKinney concluded. “I still feel the HUD will be a collaborative effort the same as it is now; the title companies will still need to prepare a good portion of the HUD, and most likely it will be sent to the lenders. Then they will just input the fees off the HUD we prepare onto theirs and send to the borrowers. Really, I feel all it does is it takes the blame off the title companies if the three-day rule is not met and a closing cannot take place.
“The title companies will still do everything else that goes along with the file and closing process, so I do not see much change other than it will stop the last-minute closings from happening and hopefully eliminate the wait for lender docs to be sent five minutes before -- or should I say after -- the closing time, which will make us all happy.”