FR-BAR & CFPB Updates

Dear Fund Member:

Real estate market reports and our branch order volume indicates that many of you are very busy right now. That is great news, and I am sure you are enjoying the increase in your business. Here at The Fund, we are very busy putting the final touches on Fund Assembly, making sure that the program information is the very best it can be and that the experience of each attendee is educational, informative AND enjoyable. With an expected attendance of 1300, the logistical challenges are huge, but we will meet the challenge! I am really looking forward to attending my first Assembly as an “insider” and interacting with many of you to see how things are going as we move towards August 1, 2015.

Revisions to the FR-BAR contract form are fully underway. The goal of the committee authoring the changes is to have a new form ready in July. The first set of revisions will include new language governing the extension of closing dates and the financing contingency. Last week, the committee presented the proposed changes to the Executive Council of the Real Property, Probate and Trust Law Section. There was general support for the changes. Other areas for potential revision include deposit default provisions, scheduling of initial inspections, resolution of any defects, and time periods for delivery of title commitments. There are other issues not on this list that the committee is discussing. Stay tuned for news about the new form. If you don’t use the FR-BAR contract, then you need to address these issues in your contract, if there is a possibility that the new CFPB rules will apply to your transaction. Remember that the new rules apply to those transactions based on a loan application submitted on or after August 1, 2015.

Speaking of the effective date of the new CFPB rules, ALTA has been advocating for a period of “Restrained Enforcement” of the new rules for several months. This advocacy has taken the form of written and oral communications with CFPB and in testimony before Congressional Committees. “Restrained Enforcement” would involve leaving the effective date of August 1, 2015 in place but adjusting the approach to enforcement by requiring that lenders and settlement agents undertake a good faith effort to follow the rules, with enforcement beginning at a later day, e.g., January 1, 2016. This would give the industry and the CFPB a chance to see what works in the “real world” and what might need to be tweaked to avoid costly disruptions to consumers. This is not without precedent. HUD took a similar approach when the RESPA disclosures were modified in 2010. On March 18, 2015, a letter signed by 16 organizations (including the American Bankers Association, ALTA, Mortgage Bankers Association, the National Association of Home Builders, and the National Association of REALTORS) urged the CFPB to adopt Restrained Enforcement. You can read a full copy of the letter online.

I hope that you have found this brief update helpful. As always, thank you for your support of The Fund.

Best Regards,

Melissa Jay Murphy
Senior Vice President
and General Counsel