In advance of the October 3rd, 2015 implementation of the TILA-RESPA Integrated
Disclosure (TRID) rule, there were worries that without a formal adjustment
period, the unfamiliar new regulations would cause delays in closings,
leading to frustrated clients. However, are these concerns valid now that
mortgage loans that included the new Loan Estimate and Closing Disclosure
Forms required by TRID have been completed?
Training Helps Avoid Delays in Closing
A frequently stated concern before TRID implementation began in October
2015 was that a lack of familiarity with the new rules would lead to errors,
with all the oversight risks and delays to closing associated with them.
The good news is that lenders reported that the first loans to be completed
under the new TRID requirements were error-free.
Industry insiders say that lending agents have been cognizant of the potential
for delays, and have compensated by allowing sufficient time for the closing
process. In particular, some officers have found that it was difficult
to schedule more than one closing in a single day, but by spacing them
out they can ensure total compliance.
Some companies have reported being prepared for the implementation of TRID
thanks to extensive planning for the new rule, providing complete training
for employees on the new systems and protocols. However, other companies
claim that the training process has only been possible by designating
several employees as full-time trainers.
Another TRID-related concern that was often repeated before the October
2015 implementation involved the technological response to TRID. To make
certain older loans that required the old forms could be completed, two
separate systems need to run simultaneously. This allows for the processing
of the old forms while ensuring the applications received on or after
October 3rd can be processed by the new system.
According to CFPB Director Richard Cordray, rumors of systems that failed
in the wake of TRID implementation abound, with some arguing that the
CFPB must turn an eye towards vendors who failed to deliver working TRID-compliant
products to lenders, thus creating closing delays. However, the director
argued that vendors should be granted more leeway until the difficulties
of implementing TRID have faded away. He did, however, hint that the bureau
might investigate those LOS systems that have shown to fail after implementation.
“Some vendors performed poorly in getting their work done in a timely
manner, and they unfairly put many of you on the spot with changes at
the last minute or even past the due date. It may well be that all of
the financial regulators, including the Consumer Bureau, need to devote
greater attention to the unsatisfactory performance of these vendors and
how they are affecting the financial marketplace,” said Cordray
at a recent San Diego MBA conference.
Cordray went on to explain that mortgage lenders that have already committed
substantial resources to training and compliance for the rules would be
treated with a slightly less stringent oversight. It seems that the remarks
tend to indicate that software vendors will be under much more scrutiny
to produce compliant documents. Although, some software vendors have taken
these comments as less of a threat and more reassurance that the CFPB
was ready to help as a partner to make implementation better.
Industry experts claim there are intricate parts of the disclosure process
that have caused snags in the LOS systems. Rounding and closing cost errors
seem to be the crux of the problem. The analysts point out that these
are industry comparisons and interpretations that need to be adjusted,
and not necessarily caused by the software.
The closing disclosures have been a concern since the cash to close table
seems to vary from the final Loan Estimate calculation. There is also
a concern that the new closing document version does not allow a section
for the lender to represent costs of ancillary credits, principal reductions,
and refunds of mortgage insurance.
It appears for now that the CFPB is taking a hands-off regulatory approach
until the software vendors can spend a little more time identifying the
deficiencies and then make the necessary changes to perfect the system.
How long the CFPB will keep their patience, is anyone’s guess.
If you would like more information on TRID or would like to schedule a
free consultation, please call Anthony Geraci at Geraci Law Firm.
To get in contact with Anthony F. Geraci, Esq. please call (949) 298-8050 or