MORTGAGE DISCLOSURES: HOW DO WE CUT RED TAPE FOR CONSUMERS AND SMALL BUSINESSES? HEARING BEFORE THE SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS SECOND SESSION JUNE 20, 2012 Printed for the use of the Committee on Financial Services Serial No. 112–138 ( U.S. GOVERNMENT PRINTING OFFICE 76–109 PDF WASHINGTON : 2013 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 19:16 Feb 15, 2013 Jkt 076109 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\76109.TXT TERRI HOUSE COMMITTEE ON FINANCIAL SERVICES SPENCER BACHUS, Alabama, Chairman JEB HENSARLING, Texas, Vice Chairman BARNEY FRANK, Massachusetts, Ranking PETER T. KING, New York Member EDWARD R. ROYCE, California MAXINE WATERS, California FRANK D. LUCAS, Oklahoma CAROLYN B. MALONEY, New York RON PAUL, Texas LUIS V. GUTIERREZ, Illinois DONALD A. MANZULLO, Illinois NYDIA M. VELA´ ZQUEZ, New York WALTER B. JONES, North Carolina MELVIN L. WATT, North Carolina JUDY BIGGERT, Illinois GARY L. ACKERMAN, New York GARY G. MILLER, California BRAD SHERMAN, California SHELLEY MOORE CAPITO, West Virginia GREGORY W. MEEKS, New York SCOTT GARRETT, New Jersey MICHAEL E. CAPUANO, Massachusetts RANDY NEUGEBAUER, Texas RUBE´ N HINOJOSA, Texas PATRICK T. MCHENRY, North Carolina WM. LACY CLAY, Missouri JOHN CAMPBELL, California CAROLYN MCCARTHY, New York MICHELE BACHMANN, Minnesota JOE BACA, California THADDEUS G. McCOTTER, Michigan STEPHEN F. LYNCH, Massachusetts KEVIN McCARTHY, California BRAD MILLER, North Carolina STEVAN PEARCE, New Mexico DAVID SCOTT, Georgia BILL POSEY, Florida AL GREEN, Texas MICHAEL G. FITZPATRICK, Pennsylvania EMANUEL CLEAVER, Missouri LYNN A. WESTMORELAND, Georgia GWEN MOORE, Wisconsin BLAINE LUETKEMEYER, Missouri KEITH ELLISON, Minnesota BILL HUIZENGA, Michigan ED PERLMUTTER, Colorado SEAN P. DUFFY, Wisconsin JOE DONNELLY, Indiana NAN A. S. HAYWORTH, New York ANDRE´ CARSON, Indiana JAMES B. RENACCI, Ohio JAMES A. HIMES, Connecticut ROBERT HURT, Virginia GARY C. PETERS, Michigan ROBERT J. DOLD, Illinois JOHN C. CARNEY, JR., Delaware DAVID SCHWEIKERT, Arizona MICHAEL G. GRIMM, New York FRANCISCO ‘‘QUICO’’ CANSECO, Texas STEVE STIVERS, Ohio STEPHEN LEE FINCHER, Tennessee JAMES H. CLINGER, Staff Director and Chief Counsel (II) VerDate Nov 24 2008 19:16 Feb 15, 2013 Jkt 076109 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\76109.TXT TERRI SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY JUDY BIGGERT, Illinois, Chairman ROBERT HURT, Virginia, Vice Chairman LUIS V. GUTIERREZ, Illinois, Ranking GARY G. MILLER, California Member SHELLEY MOORE CAPITO, West Virginia MAXINE WATERS, California SCOTT GARRETT, New Jersey NYDIA M. VELA´ ZQUEZ, New York PATRICK T. MCHENRY, North Carolina EMANUEL CLEAVER, Missouri LYNN A. WESTMORELAND, Georgia WM. LACY CLAY, Missouri SEAN P. DUFFY, Wisconsin MELVIN L. WATT, North Carolina ROBERT J. DOLD, Illinois BRAD SHERMAN, California STEVE STIVERS, Ohio MICHAEL E. CAPUANO, Massachusetts (III) VerDate Nov 24 2008 19:16 Feb 15, 2013 Jkt 076109 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\76109.TXT TERRI VerDate Nov 24 2008 19:16 Feb 15, 2013 Jkt 076109 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\76109.TXT TERRI C O N T E N T S Page Hearing held on: June 20, 2012 .................................................................................................... 1 Appendix: June 20, 2012 .................................................................................................... 39 WITNESSES WEDNESDAY, JUNE 20, 2012 Abbinante, Christopher, President, American Land Title Association (ALTA) .. 14 Canfield, Anne C., Executive Director, Consumer Mortgage Coalition (CMC) .. 16 Cosgrove, Bill, CMB, President and Chief Executive Officer, Union National Mortgage Company, on behalf of the Mortgage Bankers Association (MBA) . 18 Date, Raj, Deputy Director, Consumer Financial Protection Bureau (CFPB) .... 4 Hardy, Chanelle P., Senior Vice President and Executive Director, National Urban League Policy Institute ............................................................................ 20 Hughes, Brenda K., Senior Vice President and Retail Lending Administrator, First Federal Savings Bank, on behalf of the American Bankers Association (ABA) ..................................................................................................................... 22 Veissi, Moe, 2012 President, National Association of REALTORS® ................... 23 Wilson, Tim, President, Affiliated Businesses, Long and Foster Companies, on behalf of the Real Estate Services Providers Council, Inc. (RESPRO®) .... 25 APPENDIX Prepared statements: Abbinante, Christopher .................................................................................... 40 Canfield, Anne C. ............................................................................................. 50 Cosgrove, Bill .................................................................................................... 175 Date, Raj ........................................................................................................... 186 Hardy, Chanelle P. ........................................................................................... 189 Hughes, Brenda K. ........................................................................................... 194 Veissi, Moe ........................................................................................................ 206 Wilson, Tim ....................................................................................................... 212 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Biggert, Hon. Judy: Written statement of the American Financial Services Association (AFSA) ........................................................................................................... 227 Joint written statement of the Appraisal Institute and the American Society of Farm Managers and Rural Appraisers ...................................... 230 Written statement of the Consumer Bankers Association (CBA) ................. 233 Written statement of the Credit Union National Association (CUNA) ........ 236 Written statement of the Housing Policy Council of The Financial Serv- ices Roundtable ............................................................................................. 239 Written statement of the Independent Community Bankers of America (ICBA) ............................................................................................................ 242 Written statement of the National Association of Federal Credit Unions (NAFCU) ........................................................................................................ 251 Written statement of the National Association of Mortgage Brokers (NAMB) .......................................................................................................... 253 Gutierrez, Hon. Luis: Written statement of the National Consumer Law Center .......................... 257 (V) VerDate Nov 24 2008 19:16 Feb 15, 2013 Jkt 076109 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 K:\DOCS\76109.TXT TERRI VerDate Nov 24 2008 19:16 Feb 15, 2013 Jkt 076109 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K:\DOCS\76109.TXT TERRI MORTGAGE DISCLOSURES: HOW DO WE CUT RED TAPE FOR CONSUMERS AND SMALL BUSINESSES? Wednesday, June 20, 2012 U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The subcommittee met, pursuant to notice, at 1:30 p.m., in room 2128, Rayburn House Office Building, Hon. Judy Biggert [chair- woman of the subcommittee] presiding. Members present: Representatives Biggert, Capito, McHenry, Dold; Gutierrez, Cleaver, Clay, Watt, and Sherman. Also present: Representative Green. Chairwoman BIGGERT. The Subcommittee on Insurance, Housing and Community Opportunity will come to order. Without objection, all Members’ opening statements will be made a part of the record, and I will begin with my opening statement. Good afternoon, everyone. Hopefully, the bells won’t go off too soon, but we are expecting votes, unfortunately, in a little bit. So we thought we would get started right on time. I would like to welcome everyone to today’s hearing titled, ‘‘Mort- gage Disclosures: How Do We Cut Red Tape for Consumers and Small Businesses?’’ I welcome today’s witnesses to this important hearing. As we all know, Congress has been examining complex settle- ment procedures and confusing mortgage disclosures for several decades. Mortgage disclosures required under the Real Estate Set- tlement and Procedures Act, our favorite RESPA, and the Truth in Lending Act, or TILA, have been of interest to me since my days as a real estate attorney. Many of my colleagues on the committee share that interest as they, too, were real estate professionals in a former life. For most homeowners, the biggest financial decision of their lives is made at the closing table as consumers read the mounds of con- fusing and complicated paperwork. Hence, in States like Illinois, a lawyer is required at closing. For many years, Ruben Hinojosa and I have authored letters to Federal regulators outlining our concerns about these disclosures. At times, these bipartisan letters have gar- nered the signatures of over 240 Members of the House. To Federal regulators,