While there have been a wide variety of reactions to the implementation
of the TILA-RESPA integrated disclosures (better known as “TRID”),
many of the responses have been favorable. In spite of some issues regarding
the technology that underscores the new forms, most agree that the implementation
process has proceeded smoothly.
Reports from within the industry describe a relatively painless rollout
for TRID as far as internal disclosures go. Darrel Bilbrey, CEO of CrossCountry
Mortgage Inc., said, “The Loan Estimate part is going well. Now
we’re going through the Closing Disclosures. It’s a learning
curve. There’s still a lot of manual workarounds. The next three
to six months, we’ll be focused on automating those.”
CrossCountry issues Closing Disclosures to several national title services.
They claim that many of the title companies they work with are not ready
for the Closing Disclosure, which requires they provide extra training
and educating on the process. The company believes it's important
to get the system right. “It’s our documents, our compliance,
or legal responsibility and we take that very seriously,” Bilbrey said.
Richard Horn led the final rulemaking process for TRID while serving as
senior counsel and special advisor for the Consumer Financial Protection
Bureau (“CFPB”), and he believes technology will pose the
biggest challenge for those in the industry. While he does laud some software
designers for spending the resources and time to prepare TRID-compatible
software adequately, he cautions that there are still errors being produced
by these systems.
According to Horn, “[T]here are some software vendors that have put
the time and resources and have gotten it right. But there are technology
problems out there.” The complicated disclosure rules seem to have
made it difficult for some LOS systems to replicate the data accurately.
The CFPB has received a variety of complaints from vendors that have still
not mastered the new rule. However, the CFPB stresses that while they
recognize that certain companies have already devoted significant resources
to the implementation of the rule, it is confident that vendors soon will
be capable of fully implementing the rule.
CFPB representative Sam Gilford said, “We have not advised lenders
to avoid using particular vendors... market participants should focus
on making loans in compliance with the rule."
For his part, Horn has made himself available to assist companies with
the implementation of TRID. Horn underscored his concern that individual
companies may not have the resources to double-check calculations for
regulatory compliance themselves, and thus become dependent on the competence
of their software to catch any errors. This lack of resources could result
in companies sending out erroneous information on the disclosures.
Horn urges lenders to have a backup plan in the event their software is
not working as advertised. He warns that that CFPB will expect them to
address the problem by either contracting with a new vendor or canceling
the existing contract in pursuit of remaining compliant.
Some software vendors are scrambling to update their software to include
new rules being issued by the CFPB. This backlog has created some havoc
within the industry for closing agents who have yet to master the software.
The vendors have tackled the problem by requesting companies contact the
programmers directly when issues with TRID compliance arise, allowing
them to code specific solutions to issues on the fly, thus ultimately
creating software prepared for any TRID eventuality. While this tactic
may result in a cavalcade of programming requests at the outset, it should
eventually produce a finely tuned product to help ease the stress of closing
agents struggling with the new system and rules.
According to an industry professional, settlement agents continue to report
frustration at the unfamiliarity with the process. The short implementation
time has caused a bit of stress within the closing process, and it appears
to be reverberating throughout the lending industry. Trying to get monthly
closings completed on time, with the added stress of learning a new software
system while implementing new disclosure rules, is causing some concerns.
The good news is that many vendors have already seen their efforts at TRID
compliance rewarded by positive reactions from customers regarding carefully
prepared TRID compliant closing instructions. Some customers have reacted
positively to the new standards established by TRID, and while the process
is far from complete, it represents a strong first step towards full TRID
implementation and compliance. It will take many more months of alterations
and updates, but for now, the system seems to be rapidly evolving.
If you would like more information on this matter, please
contact Jaspreet Kaur or call our main office at (949) 298-8050.