<< Collaboration continued from Page 133 Potential regulatory changes, especially in relation to opera- tional changes brought about by the TILA-RESPA Integrated Disclosure (TRID) rule, could have significant consequences for the mortgage community. Even if TRID is repealed, however, the current mortgage market still requires lenders to engage in
better collaboration efforts with third-party partners, like title and
Thus, it behooves lenders to implement strategies to improve
workflow and communication with their settlement partners to
achieve faster, more compliant mortgage closings — regardless of
what rules are in place.
Change is coming
The future of the CFPB — and with it, the “Know Before You Owe”
mortgage disclosure initiative — is uncertain. Since the passage of
Dodd-Frank, however, an entire cottage industry of service and technology providers has thrived on helping lenders ensure mortgages
are properly underwritten and terms are disclosed and documented in
accordance with regulatory requirements. The savviest of these companies are preparing now for the potentially huge tectonic shifts that
may change the landscape of loan compliance and quality control in
the near future.
Will TRID tolerance thresholds on how much change is allowed
between the initial Loan Estimate (LE) and final Closing Disclosure (CD)
be relaxed? Will the fines the CFPB can impose when those tolerances
are breached be reduced or eliminated?
No matter what changes the future holds, lenders that have invested
in tools that support 21st-century collaboration with settlement agents,
title insurance underwriters, county recorders and other partners in the
mortgage origination process will be best positioned for success.
Why collaboration matters
Prior to TRID, responsibility for each disclosure was clearly delineated.
Lenders completed the Good-Faith Estimate and Truth in Lending
initial disclosures, while the HUD-1 Settlement Statement was solely
in the settlement agent’s wheelhouse, with minimal input required
from the lender.
From the lenders’ perspective, the closing table was the “finish line”
of accountability. Post-closing activities, such as perfecting the loan file
with the addition of the recorded security instrument and final title
policy, were a secondary priority that often fell by the wayside in terms
of focus and urgency.
As both lenders and settlement agents can attest, TRID made these
processes more complicated and burdensome. For one thing, the
tolerances that apply to each loan fee are more difficult to discern —
and sometimes stricter — under TRID. Moreover, because TRID holds
lenders responsible for loans for their entire life, lenders now find
themselves taking responsibility for both the LE and CD as well as
ensuring loan-file perfection.
These new processes have something in common: They are all significantly improved when lenders have the ability to collaborate in real
time with settlement agents, title policy underwriters and other parties
to the loan.
For example, the vast majority of information needed for the “
Sum-maries of Transactions” section of the CD — taxes, insurance prorations,
credits, deposits, loan payoffs, etc. — is supplied by the settlement
agent. Pre-TRID, the lender was never responsible for finalizing this
information. The settlement agent produced it instead, often just before
closing. Now, lenders have a limited timeframe to collect this information from the settlement agent so it can be furnished to the borrower no
fewer than three days prior to closing, as prescribed by TRID.
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