Mortgage Compliance

TRID: Let’s Re-Think This Thing

Re-Think-TRID
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Re-Think-TRIDEveryone is well aware of the requirements of the new TRID rules and the related challenges in issuing the new forms, accurately and timely.

There are some serious concerns in the Secondary Markets that minor issues, like fees not placed in the proper order, decimal places not carried out correctly, and/or misspellings on documents, along with missed timing of disclosure delivery, could render a loan in violation of the new disclosure requirements. This could expose a lender and/or a loan buyer to severe civil monetary penalties.

Although CFPB, Fannie, Freddie and FHA all say they will be tolerant of such minor errors, no direct waiver has been granted, under the law, that such would not be treated as a violation. Accordingly, some private loan investors remain wary. (Investors)

Much has been said about the creation and issuance of the new forms. The increased time and costs for lender creation and review, and how this delays many closings. What about taking a much closer look at the entire process?

Heretofore, the Realtor basically controlled the transaction. They negotiated for sellers and buyers and helped select the lender and the title agent. Once everything was in place, they decided when the loan would close and all parties had better make the date.

Things have changed. The lender is now the responsible party for the mortgage transaction under the law. Accordingly, it should be the lender who controls the transaction, and no one else.

Once an application is received, the lender needs to be the entity to set the timeline for when the loan will close. Close, timely communication and coordination of activities between Realtors, lender and the title/closing agent is paramount to success.

Upon receipt of the application, the lender should reach out to the Realtor and closing agent to set the table for what is needed to get the loan approved and to settlement on time. A target settlement date might be set but should not be confirmed until the lender gives the final go ahead. Once the loan is approved, the information needed by a lender can be gathered from the Realtor and title agent to allow for a timely issuance of the required final Loan Estimate and Initial Closing Disclosure.

Once all information is received, reviewed and approved, the closing date can then be set to allow ample time for issuance and receipt by the consumer of the Closing Disclosure at least 3 business days in advance of consummation.

This should allow time for all parties to ensure the information being provided to the consumer, and each other, is accurate. When possible the title agent should do a mock closing and provide the projected final CD to the lender for review and approval prior to the final settlement.

It may seem that this process might extend closings but actually, in the long run, it will minimize closing delays and additional unnecessary delays and adjustments at the table. The lenders that can review and approve loans and coordinate with their counterparties to gather needed information more timely will have the advantage of getting their loans to the table sooner. That should satisfy the Realtors and consumers involved and translate into more business.

No, it’s not how it’s always been done. The game has changed. Play different.

Who do you believe should set the final closing date?

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Michael Vitali

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.
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Michael Vitali

About 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.
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