The Benefits of Automating TRID Compliance

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Even though the TRID regulation will see its 4^th birthday this October, we still see a lot of our blog traffic searching for this topic. It is likely because the strict penalties a misstep can cause, continues to keep originators up at night.

Managing this process between multiple systems, using spreadsheets to compare fees and manual processes to compare document versions, and an incomplete picture of the issues tend to be the cause of these recurring nightmares.

We talk about the power of automation a lot here at LoanLogics and share a unified belief with ComplianceEase, our compliance partner, that tight controls around compliance are a critical component of overall loan quality management. As such, below I share the top benefits for automating TRID compliance.

Ensure the data is pure.

One of the trickiest parts of TRID compliance is organizing the various versions of the loan estimate (LE) and closing disclosures (CD) in chronological order. Automation can ensure the proper classification of all these documents (i.e. which document is which, which came first, which came forty-first, whatever it may be).  It also ensures that the right fees are being identified and extracted from each of those documents for comparison and whether there are missing documents, or data discrepancies present.  Before compliance testing begins, automation can help lenders be data confident and avoid garbage in, garbage out findings.

Leverage an integrated workflow to speed up reviews. 

To complete a full TRID review, many auditors still toggle between multiple systems to determine and report the nature of their compliance defects. They start with hand typing the required data into a compliance tool for evaluation. Others may be a bit more sophisticated with a custom integration that takes whatever data is in their LOS and dumps into the compliance tool.   Both methods risk the transfer of bad data which can lead to errors in compliance results, further highlighting the importance of my first benefit of starting with purified data.

On receipt of the compliance report, auditors without an automated workflow must then upload results into their loan quality management system and record the defects that were flagged in the compliance testing. Once the audit is complete, they must then download the detail and submit to regulators.  In extreme cases, these calculations are being handled on offline spreadsheets then transferred back into the compliance tool for submission.

LoanLogics clients can perform upwards of 18 compliance reviews per person per day.  This can be achieved because purified loan file data is used in the analysis and is auto populated, not hand-keyed, into our loan quality management system.  This automated extraction is displayed in an easy-to-read worksheet that mimics the Loan Estimate and Closing Disclosures. This data is then sent for a detailed compliance review through a tightknit integration with ComplianceEase. Testing is automated by a set of sophisticated rules that flag only the exceptions. These exceptions are then presented to an auditor in a single user interface to work through without the need to jump back and forth between systems to complete his or her review.  From within a single system too, originators can receive, confirm the final report and submit to regulators.

Centralize reporting to evaluate loan quality trends across audit type.

Another benefit of automation and a well-integrated system is the ability to have centralized reporting where all the results can roll up into a single database and carved up into a series of reports to analyze. Root cause of defects, trends and areas of responsibility can all be easily identified as needed with the push of a button.  Centralized reporting also creates an audit trail of information to present to regulators should an examination occur.

Compliance is daunting, evidenced by the number of hits we continue to get on our blog looking for TRID guidance four years since its implementation. With automation at the helm, originators can be data confident, quickly get through their workload and understand the nature of their compliance findings.

Want to know more about LoanLogics’  TRID compliance solutions?  Download our workflow integration map with ComplianceEase to see how a single user interface and superior automation can help you streamline compliance.

You can also visit our website to explore our compliance solutions or email us at loanlogicsinfo@loanlogics.com to ask a specific question.

About the Author

David O'Malley

David J. O’Malley is a recognized expert in quality control technology and services and holds the position of Director of Quality Solutions for LoanLogics. In his role, he helps guide the company’s quality control product roadmap and works closely with mortgage lenders to apply automated data validation prior to loan review and best practice audit workflows to their quality management procedures. With over 25 years in the financial services industry, his experience includes the establishment of two quality assurance outsourcing operations and co-founding a company that produced one of the first commercially sold quality assurance systems in the country.