On August 1, 2015, in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) will implement a new rule that integrates mortgage disclosures required by the Truth in Lending Act (...

 

DEPARTMENT OF FINANCIAL SERVICES

Division of Insurance Agents and Agency Services

RULE NO.:RULE TITLE:

69B-186.008Escrow Disbursements

PURPOSE AND EFFECT: On August 1, 2015, in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) will implement a new rule that integrates mortgage disclosures required by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA). The new “TILA-RESPA” rule includes a new “Closing Disclosure” form that replaces the currently used HUD-1 Settlement Statement. Like the currently used HUD-1, the new Closing Disclosure form, with few exceptions, is required for use in consumer mortgage transactions. National industry groups and state regulators have expressed concern that the new Settlement Disclosure form provides inadequate and potentially misleading information regarding the cost of title insurance.

A noteworthy feature of the TILA-RESPA rule is the degree to which it alters the customary dynamic between lenders and settlement agents during the mortgage closing process. By custom, lender-creditors have typically relied on settlement /title agents to provide and assume responsibility for completing the HUD-1 Settlement Statement used at real estate closings. However, the new TILA-RESPA rule provides that the lender-creditor is wholly responsible for both the accuracy and the delivery of the Closing Disclosure form. To minimize their risk of non-compliance with provisions of the new TILA-RESPA rule, the lender-creditor community is bringing the preparation of the Closing Disclosure forms “in-house” and providing for their delivery to consumers. One consequence of the new TILA-RESPA rule's shifting of liability for the accuracy of the Closing Disclosure form to the lender-creditor is the unintended consequence of relieving the settlement agent from closing process liability, even though the settlement agent continues to handle the disbursement of escrow funds. In the absence of the proposed rulemaking, Florida regulators will be limited in their ability to prosecute settlement agents who mishandle or misappropriate escrow funds following implementation of the new TILA-RESPA rule. The proposed rule addresses this problem by reestablishing provisions holding settlement agents responsible and accountable for their actions during the course of the closing process to assure that Florida consumers will retain protections currently afforded them under Florida law, following implementation of the new TILA-RESPA rule.

The proposed rule establishes the following:

(1) Provides consumers with an explanation regarding the true cost for the title insurance policy they are purchasing as well as showing the exact amount of premium paid, as apportioned between parties.

(2) Authorizes the title insurance agency to hold and disburse the funds being held in the agency’s escrow account to fund the transaction.

(3) Require the settlement agent to certify that the escrowed funds are being disbursed consistent with the disclosure provided to all the parties and as the lender has instructed the funds to be paid.

(4) Incorporates by reference new Form DFS-H1-2146 (Florida Insurance Premium Disclosure & Settlement Agent Certification Form, Effective 08/2015).

SUBJECT AREA TO BE ADDRESSED: Requirements and Responsibilities of Title Agents.

RULEMAKING AUTHORITY: 624.308(1), 626.8473(6) FS.

LAW IMPLEMENTED: 626.8473 FS.

IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: Monday, April 20, 2015, 2:00 p.m.

PLACE: Room 116 Larson Building, 200 East Gaines Street, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Ray Wenger @ [phone] or [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Ray Wenger, Division of Agent & Agency Services, Bureau of Investigation, 200 E Gaines Street, Tallahassee, FL 32399-0320, [phone] or [e-mail].

THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS AVAILABLE AT NO CHARGE FROM THE CONTACT PERSON LISTED ABOVE.