A Kinder, Gentler FHA

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FHA’s Office of Single Family Housing has issued a notice outlining their position on TRID enforcement.

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.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.