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It’s hard to believe that TRID is now almost five years old. But even as memories of the industry’s massive operational and compliance readiness efforts begin to fade, TRID errors continue to plague lenders. However, while there have been challenges along the way, a lot has still gone right that we can celebrate. The industry will continue to work its way towards more efficiency so that new guidelines and compliance mandates can be addressed far more easily than in the past.
What’s gone right
Technology.
Automation advancements have eliminated the use of spreadsheets and manual processes to compare fees and document versions of disclosures creating a much faster way to verify and validate the data on these documents. Doc processing tools powered by machine learning and automated rules can version LEs and CDs, extract data for comparison, such that defects can be more easily and accurately identified during compliance reviews.
Tight-knit technology integrations between doc processing, loan quality management and compliance technology has also helped to alleviate TRID burdens. By integrating these systems together, lenders no longer have to toggle between multiple systems to complete a compliance review. Through a single user interface, data, documents and data discrepancies found in automated processing can be pre-populated in a compliance audit worksheet, disclosures can be compared, and fee inconsistencies evaluated. Any conditions identified can then be cleared before submission to a compliance engine to complete the analysis.
The continuing challenges
One challenge that has cropped up in the industry is the number of LE and CD versions being created during origination. Due to regulatory concerns and erring on the side of over-cautiousness, some lenders have gone so far as to create new versions anytime any data point changes. Because you can’t really just review the final versions of disclosures, this can tend to overcomplicate compliance reviews and pre-purchase reviews, that must address both TRID and investor compliance overlays.
The good news is that automation as described above can do the heavy lifting no matter how many versions of the LE or CD are created. However, every lender needs to consider what is a reasonable approach for creation of new versions. The ultimate goal is to keep the borrower accurately informed and not overwhelmed.
A continuing challenge is related to the upward pressure on origination costs that regulations such as TRID have created. Complicating this has been the number of tweaks, perhaps for the good, that have been made since the rule became effective that have driven both process and system adjustments. One strategy to overcoming this challenge is to leverage automation wherever possible. For example, whether you use vendor software to perform compliance reviews in house or you outsource to a service provider, evaluate those vendors on the amount of automation they provide to the process. Understand how vendors are changing their own procedure and systems to keep you compliant. One less thing you need to address!
What the future holds
As with all major regulatory rules, there comes a time for a retrospective look and reassessment. For TRID, that time has come. The CFPB asked for public comment late last Fall. In January, multiple industry groups sent commentary to the CFPB regarding assessment of the rule stating, “We believe this assessment should result in identifying paths to reducing regulatory costs, facilitating compliance, and assuring that the TRID disclosure scheme succeeds in informing and empowering consumers in the mortgage origination process.”
As this assessment is made and in preparation for whatever the outcome is, there will be three critical areas lenders should remain focused on for the future, driving greater accuracy in mortgage loan data, maintaining compliance quality control and evaluating compliance defect and trends for continuous process improvement. As previously discussed, technology automation and integration are already moving the needle here, but the journey continues!
