A Conversation With ... Kim Hogan Chaffin

New rules regarding home loans under the Dodd-Frank Act are scheduled to take place Oct. 3. How will that affect the title industry?
The biggest change for a closing will be that the prior forms that had been used are being consolidated into two: the loan estimate form and the closing disclosure form. They are mandated. Almost more importantly are the timelines. The closing disclosure form has to be delivered to the borrower a minimum of three days before closing. There are, of course, all kinds of regulations on what triggers the three days, what delivery is, etc.

Right now, on actual purchases with new loans, there are changes at the table that happen all the time. It will slow things down.

These regulations are all primarily directed at lenders, so they have the most burden.  Wells Fargo just announced they would handle the actual delivery of the statement, at least for a while. That is going to change the flow of communication. Currently, in most closings, there is a closing agent and the lender will give all the info to them to send for approval. Now, because of the timeline, the closers will be providing information to the lender, the lender will then put their own information in and deliver it. The path changes.

How will this affect Hogan’s dealings in the industry?
That is going to be a lot to deal with for a while because changes at the table can really throw things off. Some of these changes that weren’t that uncommon before, could be handled with some quick communication back and fourth, a phone call. Now, it looks like there won’t be a lot of tolerance for changes at that table. It could throw off the time period, starting the three days over. It’s becoming clear that everybody is going to have to communicate more, understand each other a little better and anticipate the changes.

How will the changes affect the consumer?
They can’t be rushed. They are going to get their time by law. They will have time to look, adjust, ask questions and understand. The National Realtors Association encourages people to add 15 days to closing time. In Springfield, it’s a 30-day closing average, so, now, perhaps 45 days. That might not happen. So much of it is a learning curve. Six months from now, it will look smoother.

What is the ultimate goal?
A smoother closing transaction and a better-informed consumer/borrower. The Consumer Financial Protection Bureau’s catch phrase is, “Know before you owe.” That’s valid, it’s just getting there that’s tough. That’s something that wasn’t happening before the recession.  

What is Hogan doing to prepare for the switch?
We started meeting with our underwriters over a year ago. They were looking at the national scheme of things and knew what was coming and knew it was real. We have to meet two or three times with them and all our employees to make sure they understand and take a broad brush look at it. We’ve also gone through some software improvements, software that will incorporate the new forms. We upgraded our server to meet those needs, so there were some expenses there. There may be a compliance officer in our future. Right now, all of the focus is on these new forms and new timelines.

This isn’t the first time Hogan has adapted to change. Tell me about Jack Hogan’s DOS-based software development.
He was way ahead of the game on that. Our industry started as an abstract company. The abstracts would tell the story of the property and provide title evidence when accompanied with an attorney’s opinion letter. That started changing about 40 years ago when title insurance started emerging. That’s where the software came in. He created his own software and actually sold the software to some other companies.