Five members of our team had the opportunity to attend the ALTA Annual Convention in Boston this past week and the atmosphere was much different than the pre-TRID conventions held earlier in the year. The convention included more celebration and cheer than doom and gloom. The reason for this is that, similar to January 1st, 2000, there was no apocalypse on October 3rd, 2015. While there is still a lot of work to be done over the coming months and years we are in good shape to move forward and start producing in a post-TRID environment. While at the Annual Convention we had the opportunity to visit the JFK library and museum and I was reminded of the following quote from our 35th President:
"There are three things in life which are real: God, human folly and laughter. Since the first two are beyond our comprehension, we must do what we can with the third." - John F. Kennedy
While I was thinking of a topic for our next TRID Tip this quote came to mind because I've been avoiding one of the most incomprehensible statutes of the law and it deals with recording fees. The reason for my avoidance is that I do not have a good explanation as to why the CFPB wants recording fees handled the way they do and I was sure this TRID Tip would prompt such questions. If you are not sure what I am referring to, all recording fees, other than transfer taxes, must be grouped together on line E1 of the Closing Disclosure. While there are spots to itemize the cost to record the Deed and Mortgage, the cost for all other documents are lumped together with those two in the borrower, or seller, paid at closing totals. In practice this means that if you are recording a Deed, Mortgage, Declaration of Homestead, Trustee Certificate, MLC, etc.., E1 will show the cost of the Deed and Mortgage individually but the total recording charges on this line will include the deed and mortgage and all of those other documents as well. Intuitively you would think it would make more sense to add additional lines to section "E" to itemize the additional recorded documents, similar to what we've done for years on the HUD, but that is not how the CFPB wants these fees disclosed. When asked about the reason behind this and whether the CFPB thought this would be confusing to the consumer they responded that in their testing the test subjects did not find this confusing. However, if you look at the completed sample forms on their website it makes you wonder if they presented examples of the Closing Disclosure to consumers for situations where there were documents other than the deed and mortgage being recorded. So much for full disclosure...
Q: How does the disclosure of recording fees differ between the Loan Estimate and the Closing Disclosure (compare § 1026.37(g)(1)(i) with § 1026.38(g)(1)(i))
Similar to the Loan Estimate, the Closing Disclosure requires the sum of all recording fees to be disclosed as one item. See § 1026.37(g)(1)(i). However, the Closing Disclosure also requires the amount paid to record the deed and mortgage be itemized separately. Accordingly, the itemized recording fees for the deed and the mortgage should only include the amounts needed to record each of those documents. Note that recording fees associated with any other documents, except for the deed and the mortgage, are only included as part of the total recording fees and are not separately itemized. See § 1026.38(g)(1)(i).