Greg: Steph, we’re back with another episode of your podcast, how are you today?
Steph: I’m doing wonderful, how are you?
Greg: I’m doing well, thanks for asking. I have a couple questions about some of the new TRID regulations that are in place. I know there’s some extra paperwork going around that are protecting buyers and seller’s privacy issues, so I was hoping you could explain that to me a little bit.
Steph: Yes. This really, it’s interesting because the protection of non-public personal information, it’s like an acronym.
Greg: Yes, an acronym.
Steph: Yes, it’s NPPI. This actually doesn’t have anything to do with the new TRID rules, but it has everything to do with our charge as the closing attorney to protect non-public personal information. In implementing the TRID requirements, attorneys are required to comply with what’s called ALTA best practices. It’s all coming at once, Greg. We are trying to make sure that we’re compliant with protecting non-public personal information, at the same time as complying with the new lending document rules.
Greg: They’re not necessarily one in the same. They’re different items and you might as well just if you’re going to change, a little bit more change I guess is why not do it all at once.
Steph: Why not? Why not do it all at once? What’s happening is we are in the area of the country where conference style settlements occur. You’ll have a closing where buyers, sellers, title professionals like your closing attorney, the real estate agents, and sometimes the loan officer, you basically set an appointment, you arrive at the time and place, and together there is a closing to review the documents and figures.
Greg: Right, so you’ll end up with sometimes six, seven, eight people in a conference room to do a closing, correct?
Steph: Yes, and there’s sometimes even children, occasional dog. You’ll have the standard closing where the keys are passed at the table. That’s our contracts, it’s the possession is at closing, so the keys are passed. What happened is, the question arises under the new rules, can everyone be in the same room while information is being reviewed? That’s the question.
Greg: This is a privacy issue about … What are we concerned about? The sellers might hear the buyer’s interest rate or income, or something along those lines that is really none of their business?
Steph: Yes. What it is is there’s some federal and state laws, including something that’s called the Graham Leach Bliley Act that require the title company to develop policies to protect non-public personal information. What that means, if you have a borrower’s name hooked up with a loan amount, or an interest rate, and their address, social security numbers, this information that is normally on a settlement statement with a name and a loan number, that can’t be under the rules. Again, it’s a technicality, but it’s not supposed to be disclosed to third parties. What’s happening is, your settlement statement which used to be freely emailed to the buyer, the seller, the Realtors, and the loan officer, they’re now regulating closer. It’s not that these rules weren’t in effect, but there’s really more enforcement of keeping that private. What we can do is, the new TRID rules say that you can only give the closing disclosure to the buyer.
Greg: Then the buyer has to choose whether or not they’re going to share it with their agent or anyone else.
Steph: Correct. The settlement agent, the closing attorney can’t share it. The same thing for the seller. We’re giving the seller their closing disclosure. We’re giving the buyer their closing disclosure. They’re two separate documents.
Greg: Which is different than it used to be, correct?
Steph: Yeah. You used to have a settlement statement, so what we are doing that isn’t a closing disclosure, that is just given to the buyer and seller. We’re doing an additional document, and there’s a buyer side and a seller side, and it’s called an ALTA. American Land Title Association settlement statement, and there’s a buyer side and a seller side. What we’re doing, closing attorneys this is new, prior to the closing at Horne Title, I’m just doing a very brief authorization that says that before the proceeding with the settlement, they’re authorizing me to review the loan documents and other documents that contain non-public personal information in the presence of other parties related to the transaction. If they’re going to get the option basically to do this in a private area so that it’s just them and the closing attorney, or they’re going to sign allowing them to do it in the presence of parties related to the transaction.
Greg: Have you found that most people are opting for the private conference, or are most people okay with the way we’ve done closings in the past so that we’re still at a table with six people or however many, and that it turns out it’s really not that big a deal for someone to know what kind of loan you have?
Steph: Yes, what we’re finding is we have done some closings here at Horne Title under the new rules, and we just start the closing with a document getting the consent to sit in the same room in the conference style closing, and they do consent. It’s just something that people should be aware of.
Greg: It’s an option.
Steph: Correct, it’s an option that they can be in a private area, or they can sign in the presence of parties related to the transaction.
Greg: By and large, most of the information that’s going back in a closing, I understand it’s private, but for the most part it’s the prevailing interest rate, right? The sellers sort of know what size loan to have, because you bought the house from the sellers. We’re not talking, it doesn’t seem to me like super, super embarrassing top secret medical information. I understand everyone has a right to be private, but you’re not going over … Do the sellers get a chance to see social security numbers? I guess that is …
Steph: Well that’s the question. Social security numbers wouldn’t be on a settlement statement, but in the course of doing an affidavit if there was a lien or judgment, somebody with a similar name, the seller’s social security number is provided by the seller. There’s a 1099 where the seller’s social security number is requested, so the idea is that there’s two things going on, to be very clear there are two things. We’re asking first do you want to sit in the same room? In case information comes up, there could be a chance your social security number is on a document, so there could be somebody sitting next to you that could see your social. Then number two is just the idea of being able to distribute a copy of this ALTA settlement statement to the real estate professionals involved in the transaction, to the attorney, and to anybody else, the loan officer. To basically whoever’s in the room to be able to give them a copy of the settlement statement. Two different things going on here.
Greg: Okay, and I know from having talked to you for years that you’re all about disclosure, and being up front, and being transparent, so this sounds like this is just locking that in lace, that everyone knows their options up front, you don’t want to surprise people with any kind of regulation in the closing. People know what they’re getting into, and if they want to keep it private they can, and if they want to do the closing in a traditional manner, they can. It’s really up to them.
Steph: Right. It’s just protecting not only our lender, who the closing attorney represents, but also the realtors. If they were challenged that they were receiving non-public personal information, that there was an authorization, that they were authorized to get it. Just know at Horne Title we will have a document, we’ll do it very nonchalantly prior to the closing, and get it signed, just authorizing the agents to be in the room, and also to receive a copy of the settlement statement. That’s just going to be a new little tweak going on in closings, and hopefully it won’t interfere with the closings. It’ll be just done right away, and then we’ll have that document in our file in case anybody was later to challenge that we had a conference style closing.
Greg: Wonderful. Once again, an absolute fountain of knowledge, I appreciate it. I feel smarter every time I stop by your office.
Steph: Thanks, Greg.
Greg: See you next time.
Steph: Okay. Bye bye.