The Dangers of ReDisclosure

Under the new TRID rules, failure to offer the borrower a CD that closely resembles the LE puts the lender in a precarious position. Redisclosure is only permitted if certain details of the deal change. If possible, this must occur at least three days prior to closing, possibly pushing out the close another three days. Redisclosure is costly, time consuming and irritating to consumers. It can cause problems with business referral partners who need to close real estate deals on a schedule in order to better serve borrowers who are in transition between residences. Perhaps most significantly, it opens up the lender to other TRID-related problems, like botched timelines, that could render the loan unsellable. If the lender makes an error on the CD and cannot redisclose, the lender must absorb the loss.

We wrote about this at some length in our new white paper on TRID compliance and in this article on MReport.com.

As you would expect, lenders have worked to avoid these problems by making certain that every cost and fee on the CD is known in advance so that it will always match up with the LE and preserve the timeline. Providing this kind of accuracy is as easy for smaller settlement services companies as it is for larger firms, but since lenders have traditionally not included them in their fee databases they have pushed them out of some deals in favor of larger title networks for which they already know the accurate fees in advance.

We noticed this trend early on and took steps to protect these smaller firms, and also lenders who were in danger of seeing the dismantling of local business referral machinery they had counted on for years to generate new business.

Some will argue that without an alternative, it’s far better to make fewer loans that you know you can sell than to make many loans that you may end up holding when TRID problems make them unsellable. The truth is that even if their loans are salable, lenders who do not have a good TRID solution will spend more money to close when they absorb losses due to incorrect LEs. Also, there is significant reputation risk from borrowers who feel that they are the victims of a “bait and switch” scam and report it to the CFPB.

What lenders really need is the ability to create “plug and play” title networks based on their own preferences that are capable of delivering guaranteed accurate fees in time for the LE that do not change when the CD is issued. Fortunately, technology currently exists to make this possible. Find out more about it in our new White Paper. It’s available now on our website.

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.

TRID Compliance is all About Connections

After nearly 30 years in the industry and a successful track record of building technology that currently connects lenders responsible for 90% of the country’s loan volume to the nation’s largest title underwriters and thousands of settlement agents across the country, Ernst attacked the problem of TRID compliance nearly a year before the rule went into effect. Now, after a year of use in the industry, the solution is ready to protect the industry from CFPB’s upcoming enforcement audits.

Ernst’s answer to this problem is the Settlement Agent Gateway, a collaborative fee management technology that allows settlement agents to work with lenders to negotiate fees and then manage these fees in a web-based tool through which they certify the accuracy of their fees and then make them available to lenders who need to provide Loan Estimates under the new requirements.

We wrote about this solution in this short article and in a new white paper available on our website. The solution ensures full TRID compliance, protects the lenders from having to re-disclose later for quoting the wrong fees and protects smaller settlement agent firms from being pushed out of the market due to non-compliance concerns.

It works because it allows lenders to create their own proprietary network of approved settlement agents. Lenders can easily approve and migrate all settlement service fees and providers into a software solution that integrates with their LOS, closing portal and internal programs. Lenders control all naming conventions for their required settlement service fees so there is never confusion.

The Gateway provides lenders access to 100% accurate fees from the partners they choose to work with from their first quote, keeping them in full compliance with TRID and providing a better experience for their borrowers. No other solution on the market today makes this possible.

Find out more in our current white paper.

Can There Really Be a Clear Path to TRID Compliance?

Starting in October 2016, the Consumer Financial Protection Bureau will begin taking enforcement actions against lenders who violate its TILA/RESPA Integrated Disclosure rules. For lenders who don’t have this process completely rewired for compliance, this is bound to be a horrifying experience. Some lenders have already been driven from the business for TRID noncompliance and the CFPB wasn’t even keeping score yet. Now, it gets real.

Recently, we wrote a White Paper that lays out the only clear path to TRID compliance we can see. The good news is that there is such a path. It’s also good news that the technology was created by a well known industry vendor (Ernst) and that it is already working and has been for more than a year.

But lenders need more than technology to be fully compliant. What they really need is the ability to create “plug and play” title networks based on their own preferences that are capable of delivering guaranteed accurate fees in time for the LE that do not change when the CD is issued. Fortunately, technology currently exists to make this possible.

Like most modern compliance challenges, the solution is better technology. The best technology is developed by industry insiders with a long history of building workable solutions that have stood the test of time. While nothing stays the same, success follows those who continue to do those things that work. In this short article, we wrote about that technology.

You can also read about it in our current white paper.

Life on the Road: Drama at the Gate

If you travel enough, you know that something, no matter how small, will always go wrong. You’ll forget a toothbrush, your deodorant, or get lost, lose your hotel key, there is always a proverbial wrinkle. That’s life on the road.

This trip, I left my PC charger with a client that was a two-hour drive away. Quick, dash to the store to get a replacement before my next meeting, all recoverable. Still, all in all, not bad yet.

I start the next morning at 5 A.M., board my 7:35 A.M. flight on time, land in Phoenix to catch my connecting flight too early for a gate so we’re stuck on the plane. Here we go and it’s a Friday, all bad travel omens.

We finally get to the gate a half hour late, so I dash from the farthest of the A gates over three piers to the B gates only to hear that my connecting flight has been delayed by an hour. Great! I get to work off the calories I never ingested, because there’s now no food in First Class (so much for those upgrades). I buy the lesser of many evils, a small pasta salad. I lack the courage or stamina to be adventurous with airport cuisine.

I try to find a seat at my gate or any nearby gate. The place is packed with summer travelers. I squeeze into an open seat and investigate my salad. After 3 bites I realize I’ll have ptomaine poisoning if I eat it. Better to go hungry. That’s okay. I don’t need the calories anyway and I should be back on the West Coast in time to treat myself to a nice, long, albeit very late lunch.

I still have an hour to kill, so of course I’m trying to get work done. But the distractions are many as there’s nothing better than people watching at the airport.

Squeezing in across from me is a woman with 2 small children, a stroller, a car seat and all the other odds and ends that she can carry on. Her father is in tow; her mother is in line to board the plane. She is in a panic trying to feed her little kids and one of them is refusing to get on the plane during early boarding, giving the woman’s parents a collective heart attack because the flight is boarding and she won’t get on. (She’s even stressing me out.)

A few seats down from her sits another couple, one of whom can’t seem to keep his hands off the other. The one being petted is bright red and sitting rigidly, facing forward with a cup of coffee between her hands as she tries to disappear. Eventually, the male is distracted by the woman throwing pizza at her kids.

The gate agent makes the last call for boarding for this lady’s flight, causing her family to put an end to the negotiation. She collars the oldest kid and heads toward the plane. She’s still eating pizza as she drags the stroller, car seat, and soda toward the jetway. Meanwhile, her 2-year-old is still playing around on the seats, telling anyone who will listen that she’s not about to get on that plane.

By this time, nearly everyone is watching the show, unable or unwilling to change the channel. Even the eager petter and his girlfriend are tuned in. Finally, the kid starts running away from the gate even as the agent uses the public address system to warn the family that the plane will leave them behind.

By the time the kid reaches the next gate in the terminal, the mother has given chase, with stroller, car seat, kid’s sibling and pizza in tow. The mother commences to yell: “ “Gracelyn – Gracelyn you come here – GRACELYN!………”

The kid doesn’t even slow down enough to look back.

The gate agents are stunned. The other travelers have forgotten all about their own annoying delays and can’t turn away from the drama. I’m fairly certain I was a witness to the pilot for a new reality show. That had to be scripted!

Finally, the lady puts down the pizza long enough to grab the kid, scoop up the car seat and the stroller and get to the jetway just as the gate agent closes the door.

The entertainment over, I’m finally able to board my own plane. I’m glad to be getting back home early enough for a Friday evening. I’m home for 4th of July holiday and then off again the following week to the East Coast for another round.

I wonder what ever happened with the lady, her 2 kids, stroller, car seat and pizza? So thankfully, we weren’t on the same flight.

A Return to a Life on the Road

With so much emphasis on social media, Webex and email, I believe we’re losing one of the most important components in business: really knowing our customers. In our virtual selling environment, we sometimes forget who the real person is on the other end of the conversation.

Over the next 6 months, Ernst sales team members will have plane tickets in hand and a goal of regaining that old school skill of maintaining relationships face-to-face. I’m the vice president of sales for Ernst and this was my idea, so I’m leading charge. This sounded great in the boardroom, but after years of trying to minimize travel across our enterprise, I now find myself suddenly in that ever so glamorous quandary of being on the road again.

This really shouldn’t be that different from normal life for me, because I normally clock in a hefty amount of annual travel, but the idea of a campaign seems to add that psychological weight to the anxiety of knowing that it’s life again on crowded planes, airports, hotels, juggling business/family and all the potential calamities that go along with it.

My first trip was to Minnesota, St Cloud and Minneapolis. It was a long week but thankfully a really easy one. I hope to be so lucky every time I board a plane. Outbound found summer-crowded airports that actually moved fast, beautiful weather, those lucky first class upgrades on flights and schedules that weren’t impossible.

This was my first visit to St. Cloud, a quaint, fun college town, very walkable; almost like taking a trip back in time with its renovated, traditional, small town Main Street and the Mississippi River running right through the city.

After that, it was off to downtown Minneapolis for good food and high hopes for a break in the summer humidity. Good business, good people, all-in-all it was a successful trip; easy enough to make me fret the next cab to the airport.

Photo: Top, Minneapolis at sunrise; Bottom, St. Cloud street scene. Photos by Jan Clark.

Getting Telecommuting Right; Getting the Right People

Guest Post from Jean Gagnon 

Telecommuting is a tough sell for mid-to-large corporations, primarily due to the traditional belief that physical presence is required for proper communication and management. That was certainly true in the past and may yet be true in a few industries, but it’s certainly not the case in the Electronic Services market. Here, Telecommuting is beginning to look more like a way to innovate and gain a competitive advantage.

Virtually all large businesses have been forced to spread in different buildings and cities, and have been using the telecommute model for years. If the co-worker is not in the same building, has reliable Internet access, a fax machine and a dedicated private and quiet office, one cannot tell if he is in a corporate or a home office.

Case in point: Ernst Publishing is a mid-size corporation that has been growing in double digits for the last few years because it is not afraid to leave the old ways behind and look ahead. Not that long ago Ernst Publishing’s main product was printed books. Within 15 years it has become entirely an electronic-based data provider and is not looking back. It is not afraid to Telecommute either, and has actually used it to its advantage for years. The technology department is on the East coast, and sales are on the West coast. Even the three-hour difference is hardly noticed, because customers are already spread all over the country. People in Client Services (CA and OH) are in daily communication with Software Development people (NY), so are people in Sales and Marketing (CA). Having core hours for meetings is really all that is required.

Physical presence is less and less a requirement in most knowledge-based industries today. As far as good communications, it has been found that it is more a matter of attitude (some of us are guilty regarding people in our own home) and culture (why innovating while outsourcing to another culture is an uphill battle). We can lift the phone and speed-dial a co-worker in seconds. Software Developers at Ernst Publishing can actually work remote on computers that sit in a data center, and use a technology which allows them to share a screen within seconds. When one needs help, he just picks up the phone, shares his desktop and session with a co-worker and the problem is solved within minutes.

Because of the obvious advantages of a telecommute career, can more easily work outside traditional business hours as a mid-size business often requires. Telecommuting not only brings the operating costs down, but also the cost of growing a team to next to nothing: The high costs of maintaining a physical office growing at a multiple of the cost of living, the earlier a business gets these costs under control and develops a good Telecommute model the better it can compete and the fastest it can grow.

The best people in the business are not always ready to move, so not asking them to allows Ernst Publishing access to a much larger pool of high-quality professionals, which explains how it put together an extraordinary team that allowed an unprecedented growth.