Head Down the Right Road

Communication with employees and vendors can eliminate TRID headaches.

For some mortgage businesses, the implementation of processes to comply with new Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure rules (TRID) has been rocky in the early days. For others, the path has been a bit easier. Few, however, have seemingly waded into TRID’s murky waters without encountering at least a few significant challenges.

Although there are still more than a few aspects of TRID that sorely need clarification, there are steps that mortgage originators and companies can take to make their regulatory journey a bit smoother. Many companies have taken these steps and encountered fewer challenges — or have been able to overcome the obstacles encountered. Unfortunately, some have endured a much bumpier road during the implementation process. Even for those who have struggled the most, however, there is a path to a smoother road ahead.

One key element of TRID is the transformation of forms previously called the Good Faith Estimate and HUD-1 into the Loan Estimate and Closing Disclosure forms — which disclose mortgage terms and costs to borrowers. Under TRID, with a few exceptions, if changes must be made to the Closing Disclosure after it has been issued, but before closing, then a revised form must be issued.

Redisclosure is fraught with challenges because certain circumstances may cause the disclosure timeline to reset, delaying closing. In addition, substantial variations among some categories not first disclosed in the Loan Estimate that later appear in the Closing Disclosure can trigger financial losses for the lender.

Unfortunately, some mortgage companies have apparently bypassed working or communicating directly with the title and closing agents to estimate settlement fees. Instead, they have made use of closing-cost calculators to generate the settlement estimates. In a filed-rate state for title insurance, or where the vendor has a negotiated rate with that lender, this can be a grave mistake, leading to significant variations. There also have been instances in which the Closing Disclosure agreed to by the title company and lender is not the same form that appears at the closing table. This can be problematic, to say the least.

Some companies also could request that their vendors prepare the majority of the Closing Disclosure — which is perfectly acceptable — but then do so without providing the loan-level information necessary to process the form. The bottom line is that TRID, in part, was designed to force lenders and their vendors to communicate effectively for the benefit of the consumer. Give your vendors a call, and let them help you.

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Apr 4, 2016