The Consumer Financial Protection Bureau (CFPB) is an independent United States government agency responsible for protecting consumers in the financial sector. Their jurisdiction extends over banks, credit unions, mortgage lenders, and other financial companies. Their effect in terms of the title industry is mostly felt by title insurance agencies and by settlement agents. Though they do not have the power to directly control title insurance agencies, the CFPB does control mortgage lenders which can affect the title industry. They also regulate both the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act and the TILA-RESPA Final Rule, both of which contain conditions that affect the title industry.

The Dodd-Frank, signed into federal law in 2010, was created in response to the recent recession and was intended to protect consumers. Under the new rules of the Dodd-Frank, title settlement agents are considered service providers. Mortgage lenders, including both banks and non-banks, are now required to monitor and supervise service providers and are responsible for their actions. Lenders now need to verify that title agents are able to comply with Federal regulations by reviewing the title agent’s or law firm’s written policies and procedures, providing clear expectations about compliance and monitoring the title agency or law firm. Service providers must be able to prove their compliance as well.

The TILA-RESPA, by the CFPB, are federally mandated disclosures. Under the Final Rule, owner’s title insurance coverage is now shown as optional. The title insurance premium on the New Loan Estimate must also be calculated and displayed to the consumer. Similarly to the Dodd-Frank, it places settlement agents under the control and supervision of mortgage lenders.

While the CFPB is not in direct control of the title industry, is it in control of banks and other mortgage lenders, ultimately having a profound affect on the title settlement agents and insurance agencies.

For more information on how the CFPB affects the title industry, please feel free to contact us.