Friday, March 17, 2017

Does TRID Compliance Come Down to Communication?

The Consumer Financial Protection Bureau’s TILA/RESPA Integrated Disclosure was designed to provide -- first and foremost -- more clarity to consumers, who have traditionally been underwhelmed with the process of closing a mortgage loan. A few have said that the new disclosures accomplish this, but others question it.

Regardless of what the new rule did for consumers, its impact on the mortgage industry has been significant. We wrote about this in a new white paper that is available now on our website. It was also covered in a story published by MReport last month.

No one can argue against the fact that the mortgage industry has always had a problem communicating with its borrowers. Under federal law intended to provide more complete information, the industry has been driven to deliver pounds of paper disclosures to the borrower, few of which are ever read and even fewer of which are understood by consumers.

The fact is that prior to TRID, borrowers did not have a clear picture of what the loan would cost them to close until they were sitting at the closing table. There were often surprises, which were never pleasant for the borrower. In survey after survey it was made clear that mistakes at the closing table were the No. 1 complaint lodged by consumers against our industry. The CFPB stepped in to change that with its TRID rule.

Under TRID, lenders are required to disclose accurate costs within days of the borrower’s completion of the loan application process (as defined by CFPB). Then when the loan underwriting process is complete, lenders are tasked with disclosing again at least three days before the loan is closed. The numbers on the first disclosure, the Loan Estimate (LE), and the latter, the Closing Disclosure (CD), have to line up very well. And that’s where one of the most serious problems our industry faces with TRID becomes evident.

But does this new process make anything clearer to today’s mortgage loan borrowers? Whether it does or not, the industry is now being held accountable to this new standard. Get our white paper and learn about the only clear path to TRID compliance.

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