In recognizing the lender’s challenges in implementing the new rules, FHA will not include a technical TRID compliance audit when performing their regular quality control reviews (FHA Pass).This moratorium is set to expire on April 16, 2016.
During this trial period, they expect lenders to make a “good faith effort” toward total TRID compliance.
FHA will review loans to ensure the lender utilized the new disclosure forms and that these were properly and timely provided to the consumer.
In addition, FHA still requires lenders to comply with not only the TRID rules but with all laws, rules and regulations governing mortgage lending. Lenders make such warranties in connection with the lender certifications.
FHA will not dig into loans originated on and after 10/3/2015 to determine any slip ups or honest mistakes when it comes to TRID. They seem to understand that this is a big change and are willing to allow lenders time to become better acquainted with the rules before they decide to drop the hammer of enforcements.
To meet the good faith test, lenders should be able to demonstrate the training of staff to have them be familiar with the new TRID rules and what they need to do in their roles to ensure compliance.
Also, lenders must have written policies and procedures for everyone to follow. These plans and procedures should be well documented. Lenders should have a process to monitor their loans from application through the closing to make sure all disclosures are done accurately and timely. This should be done so that consumers are made aware of the costs and terms of their loan in advance of the settlement. These are just good business practices that will help show a lender’s efforts toward compliance.
The exclusion of a technical TRID compliance review by FHA will allow lenders some breathing room to work out the kinks in identifying those little lending nuances that were overlooked in their planning and programming process. These things always pop up after things get rolling.
Now, a lender can deal with them without a fear of some reprisal from FHA. Unfortunately, that can’t be yet said for other potential legal challenges under TRID compliance.
Thank you FHA, hopefully the President will agree.