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Let’s face it, TRID is a game changer. It has revolutionized the process of how mortgage loans are closed.
The replacement of the GFE and initial TIL by the new Loan Estimate caused the need for new technology and forms; however the information being disclosed is relatively the same. The real change comes in the use of the new Closing Disclosure, and with the lender being responsible for the loan closing.
The Closing Disclosure replaces a long-standing mainstay of the loan closing process; the HUD 1 Settlement Statement. This document was the foundation on which the settlement was built. It was the final documentation, disclosure and reconciliation of what took place at closing. Now, poof! It’s gone. Some are not quite ready to let go.
This is creating major problems and challenges for lenders, closing agents and Realtors. Each of their roles in the closing process has changed. Lenders are a little wary of their new role of being totally responsible for what is disclosed on the Closing Disclosure and for what takes place at the closing. This creates delays in closing their loans
One result is that some realtors and title/closing agents are hesitant to do business with lenders that do not have the new TRID process under control (New Roles).
Realtors and closing agents find that such lenders are not disclosing timely, nor are they providing their borrowers with complete, accurate loan and fee information in their Loan Estimates and Closing Disclosures.
In the past, the lender provided the closing agent with their fees and loan information and it was expected that the agent would complete the process, the HUD 1 and make disbursements. Not so anymore. The game has changed. Like it or not, the lender is now the responsible party
The lender must gather all fee information from all related parties and issue an accurate Closing Disclosure at least 3 full business days prior to the loan consummation.
The lender must provide clear instructions, along with a final Closing Disclosure, for use by the closing agent in conducting, documenting and disbursing the loan. The lender is the lead dog and must take control of the process.
To do this, lenders must have a good working relationship with the Realtors and closing agents for each transaction. Communication must be established early and often and the lender must be aware of, and gather, all information needed from each party so an accurate CD can be issued on time.
Once the Loan Estimate is issued and done properly, changes should be minimal when the borrower selects title/closing services from the lender’s disclosed service provider(s).
Otherwise, the lender must communicate with the borrower’s chosen provider to obtain the final title and closing fees to disclose on time. But, the lender is then not accountable for any fees tolerance violations on the title services.
Lenders should provide the closing agent with a copy of the CD for review when providing it to their borrowers. If Realtors want a copy, one option is for them to have the borrower/buyer sign an acknowledgement to allow either the lender or closing agent to provide them a copy prior to (and at) the closing.
Then, all parties can review the document prior to closing (and again prior to disbursement). I suggest you check with your counsel before releasing any buyer/borrower information to the realtor or seller.
The intent of the law is to provide the consumer with information about their loan prior to closing so they can review, understand and ask questions. The responsible party to meet that intent is the lender. However to do it best the lender must coordinate information with the realtor and closing agent. Timely communication is the key.
Remember the law is written to benefit and protect the consumer. The lenders that have the communication channels to assist and allows them to issue timely and accurate disclosures will be the ones to which Realtors will refer their business. Then, all they need to do is service the relationship and get the loans to the table on time.
Do you have the necessary communication channels in place to do what needs to issue timely and accurate disclosures? Have you updated your closing instructions to provide clear instructions, and expectations, to the closing agent for conducting the closing under the new rules?
Have you accepted and met the challenge of being the lead dog in the loan process? When you do… more business will follow.
