fee determination to ensuring a responsible party is
closing the loan. TRID also was a catalyst for action
for mortgage originators who had not yet adopted a
policy related to the American Land Title Association’s
best practices — an initiative to assist settlement-service providers, including lenders, in adapting to the stricter regulatory environment in the wake
of the Dodd-Frank Wall Street Reform and Consumer
In a post-TRID world, technology will only become
a greater di;erentiator among mortgage lenders.
Some lenders select technology solutions to proactively solve problems and increase e;ciency when
a new approach challenges underlying assumptions.
Other lenders accept technology only when it has
been implemented by a competitor or proven too
obvious not to use. In the past, this might have only
spelled success or failure in the competitive market.
Now, the Consumer Financial Protection Bureau
(CFPB) and its regulatory partners at the state level
have dramatically increased expectations around
cybersecurity, vendor management and technology-based solutions to enhance the customer’s experience. It is not a secret that the CFPB leadership, for
instance, has been extremely supportive of eClosings,
which can only be accomplished with the adoption
and expense of additional software. The move toward
technology-based solutions in the mortgage industry will only increase going forward, propelled by all
stakeholders, now that TRID has shown lenders what
technology can do for mortgage businesses.
TRID took the already hot topic of vendor management and threw gasoline on the ;re, so to speak. One
of the ;rst things many mortgage lenders did in the
wake of TRID was to re-examine their settlement-service provider policies. Even those that didn’t make
an overt policy change now have the thought process
in place, and the mandate from CFPB, to apply more
rigorous vendor-management requirements.
Lenders that o;er Federal Housing Administration
(FHA) 203(k) rehab construction loans are now pars-
ing the new FHA handbook to determine where the
approved consultants, inspectors and related service
providers ;t in the TRID vendor-risk tiers. Other service
providers, like settlement and title companies, have
added “compliance fees” or “technology fees” to their
itemized fees. Mortgage lenders must decide whether
to allow those types of charges.
One aspect of TRID that has implications going forward is the way the CFPB treats borrower-selected
vendors. Because fees charged by those providers are
considered no-tolerance items (or fees not subject to
a limit) in the TRID disclosures, it is tempting for lenders to avoid any type of vetting or approval. On the
other hand, the fact that such vendors are not subject
to fee limits does not mean the lender’s responsibility
to protect the consumer from risk, even self-imposed
risk, has been alleviated.
Along those particular lines, it gets even more
complicated if a consumer’s ability to shop for
settlement-service providers is exercised. Under TRID,
a lender generally can select all settlement-service
providers, not allowing the consumer to shop around,
which results in zero tolerance for fee changes over
the course of the loan process. If the lender allows the
borrower to shop for settlement services, it also must
provide the borrower with a written list of potential
providers — although the consumer has the right to
select providers not on that list. In the case where
shopping is allowed, there is more ;exibility for the
fees to vary during the process, but the lender also
must be able to document that the consumer (not
the loan originator) chose the providers. Some lenders have added disclosures and acknowledgements to
their document packages to ensure the consumer is
informed of the rules in that area.
In a post-TRID world, the oversight, monitoring
and management of vendors and consumer consent
are guaranteed to continue to increase. For many on
the business side, this is not a wholly bad develop-
ment. The time and effort it may cost a mortgage
company to comply with new vendor procedures
and reporting could be vastly overshadowed by the
cost savings achieved by culling underperforming or
risky service providers from the ranks. At the same
time, it does represent another compliance-related
requirement, driving up the cost and turn times in
the typical mortgage transaction. The bottom line is
doing it right will now have to ;nd new, innovative
ways to set themselves apart in the coming year.
Process-improvement solutions and new marketing
technologies should gather steam in the year ahead.
Lenders are turning their attention to the consumer
experience in new and interesting ways.
; ; ;
The transition to a post-TRID set of assumptions —
the paradigm shift — is now in play within the lending community. The same shift soon will be affecting
Realtors, settlement providers, technology vendors
and ancillary industry partners. The primary group
left to weigh in on the change is consumers.
Time will tell whether the new Loan Estimate and
Closing Disclosure forms mandated by TRID will be
embraced by consumers as tools that advance transparency and enhance loan shopping, or whether the
documents will simply be signed and ignored by most
consumers — viewed as little more than a paperwork
byproduct of regulatory overreach. ;
<< TRID continued from Page 102 that if whom you worked with was important before
TRID, it is an even more critical decision post-TRID.
It is easy for compliance folks and sales people to write
at length about the new liabilities, risks and obstacles
created by TRID. In reality, much of the rule drives
lenders to where they should have been already.
Among the best practices TRID helps to encourage in
the mortgage industry include the following:
; Routinely evaluating our pipelines for e;ciencies
; Providing information to the consumer early and
; Communicating frequently with our employees
and our service providers; and
; Setting proper expectations for all involved.
If anything, the mortgage lenders that were already
June 3, 2015:
CFPB Director Richard
Cordray says regulators
will show leniency to those
who show “good faith” in
complying with TRID.
November 20, 2013:
CFPB announces new
TRID forms, set to
go into e;ect
Aug. 1, 2015.
June 24, 2015:
CFPB proposes delaying
to Oct. 1, 2015,
because of an adminis-
May 14, 2015:
Several mortgage industry
leaders testify before
Congress about TRID-
March 18, 2015:
groups ask the CFPB for
a grace period in
July 21, 2015:
October 3, 2015
until Oct. 3, 2015.
How TRID came to be