Several months after the Consumer Financial Protection Bureau’s (CFPB)
finally implemented the new TILA-RESPA Integrated Disclosure (TRID) rules,
mortgage lending operations continue to struggle with the new regulations.
Critics of the rule argue that the complexity of the regulations is causing
delays in closings, which leads to a rise in origination costs. Furthermore,
some investors are either suspending or outright rejecting acquisition
of loans originated under the new rules, fearing defects in the loans
and potentially significant buybacks.
Whether or not the mortgage industry will be able to integrate the new
rules remains to be seen. While some lenders fear the worst, decrying
TRID as an insurmountable disaster from which the industry may never recover.
Others claim that the current TRID fallout represents the new standard
for the industry, with its increased operation costs, high fees for keeping
rates locked, delayed closings, and more regulatory scrutiny. In other
words, it is just part of doing business.
However, in contrast to these negative predictions, many mortgage vendors,
especially mortgage technology firms, have a positive perspective on the
changes. While TRID does mean the work they face may be more complicated,
it also allows the most competitive vendors to differentiate themselves
by providing better and more efficient compliance products.
Some technology companies believe that lenders face difficulties when they
attempt to throw more personnel at a compliance issue, rather than just
investing in the technology necessary to cope with the long-term changes.
In other cases, lenders may have purchased acceptable technology but failed
to utilize it properly within the context of the new regulations and updated rules.
How Long Until Full Compliance
Industry experts estimate that it may take longer for the mortgage industry
as a whole to implement new TRID-compatible technology. Most analysts
say that the date effectively tends to land at about a year to a year
and a half out. While predictions vary as to how long it will actually
take the industry to reach complete compliance, nobody can deny that the
months since TRID’s initial implementation have been fraught with
closing delays and other issues thanks to the regulation.
Evidence demonstrates that on average, closings take about four days longer
than they did before TRID was implemented. However, where exactly TRID
is causing these delays is less obvious since they tend to occur at various
points throughout the loan process. Also, anecdotal evidence suggests
that customers are noticing the delays as well.
Some delays may be due to lenders performing physical workarounds for issues
that may be caused by paperless functions. Yet other lenders seem to be
optionally adding a couple days to their closing times as padding against
expected TRID issues.
While some of TRID’s kinks are still being worked out, the CFPB seems
confident that most lenders are now in an excellent position to identify
roadblocks in the loan process and deal with them accordingly. Whether
or not the increased costs TRID has created in the loan process will continue
to affect the industry moving forward remains to be seen.
Implementing Full Compliance
Some believe that as time goes on, mortgage companies will have invested
in the proper technology and processes, resulting in a drop in cost for
lenders. Critics are skeptical, saying that while TRID may be effective
in its objective of protecting consumers, the cost is being passed along
to mortgage companies, who will be forced to foot the bill for permanently
increased costs. At some point, the extra costs will eventually be borne
by the homeowner as part of normal loan fees.
As the debate rages on about the long-term effects TRID, supporters point
to the RESPA reform in 2010, which created challenges for a few months
after it had been introduced. While the new process was refined, it ultimately
worked well. They argue that the current situation with TRID represents
a similar instance of the growing pains inherent in the course of introducing
new rules and processes.
Those companies who invested in the right technology early on are going
to have an easier go of it. But for those who have concentrated on the
manual workarounds rather than the technology, are now left figuring out
just what the cost will be to their bottom line when upgrading their technology.
Mortgage insiders mostly agree that the new regulations will benefit the
consumer, and is a complex challenge that needed to be tackled. However,
even those most optimistic about the long-term success of TRID are willing
to concede that the process of total TRID compliance will be a lengthy
and involved one.
Contact Geraci Law Firm at (949) 298-8050 today, for contact
Jaspreet Kaur directly for more information.