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Mortgage lenders have no choice but to be TRID-ready

With the deadline for the new consumer disclosure rules known as TRID in the rearview mirror, mortgage lenders say the industry is largely ready.

Lee Acree, executive vice president of the wholesale mortgage division for Freedom Mortgage, said the majority of lenders, especially big players, are prepared. "You don’t have any choice but to be ready,” he said.

For Freedom Mortgage, this past Saturday’s start date was a nonevent after months of preparation, according to Acree. But TRID is different from piecemeal changes in rules and regulations that require only a tweaking of systems, he said.

“TRID really changes the entire process, starting from the origination of the loan to the closing of the loan,” Acree said. “The challenge is with programming your systems and assuring that you are doing your best to be compliant. This is really the most significant change that the industry has experienced in 30 years.”

Acree said that mortgage lenders are grappling with the technical challenge of running two systems until the pipeline of old loans, which were originated before Saturday, are cleared out of the system. The new rule should make the industry more efficient, he said, and give consumers a clearer picture of their costs and responsibilities. 

"Categorically, I believe that TRID is a good thing for the industry," he said.

TRID requires the industry to produce new forms to disclose the initial rates and the final disclosures during the closing process. The rule also requires a mandatory cooling-off period, which effectively locks the rates and fees earlier in the process and can’t be changed for a minimum of three days before the closing.

TRID stands for The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure rules. It is also known as the “Know Before You Owe” rule.

The new system is intended to be easier for consumers to understand, but has presented huge technical hurdles for lenders.  

As late as last week, mortgage trade groups were lobbying the Consumer Financial Protection Bureau (CFPB) for an emergency rule that would give lenders more time to test their systems. The trade groups also support a bill that would essentially mean mortgage industry participants couldn’t be sued or subjected to regulatory fines for several months.

This past week, CFPB’s Director Richard Cordray assured members of Congress that the bureau planned to take a diagnostic and corrective, not punitive, approach to TRID in the initial transition period.

Cordray didn’t explain what the bureau defines as “a good-faith effort to comply,” the standard to which the CFPB plans to hold lenders during an initial soft enforcement period.

Trade groups have sought a defined hold-harmless period and more clarity on what the CFPB plans to enforce.

Is the industry ready? 

At the Washington Association of Mortgage Professionals (WAMP) Expo and Real Estate Summit in Tulalip, Washington on Friday, panelists discussed the looming deadline. Dave Savage, chief executive officer of Mortgage Coach, said he doubted most loan officers and Realtors were ready to talk about TRID with consumers.

“Loan officers aren’t ready to have the TRID conversation with families,” Savage said.

Only a couple of attendees, however, raised their hands when asked if they weren’t ready.

“We know this is a big deal,” said Charles Clark, director of the Washington State Department of Financial Services Division of Consumer Affairs, to the group of about 40 mortgage professionals at the real estate summit. Under most circumstances, Clark said, the state's regulators will point out errors and possibly write up their findings, but will not refer the findings for enforcement actions.

“If we go into a shop and somebody hasn’t heard of TRID, that is going to be a problem,” Clark said.

Lenders speaking to Scotsman Guide News on Monday, however, were confident that they have already met the CFPB’s standard of “good-faith compliance.”

“We are really confident that the transition will be smooth,” said Scott Reed, senior vice president of Carrington Mortgage Services LLC. “We have done a bunch of training over the last 60 days." According to Reed, Carrington's employees received  as many as 18 hours of training related to TRID per person on average.

"Internally, we are very well prepared. Externally, we have done the same with [our brokers]," Reed said, adding that the real estate agents and title companies that the company deals hopefully have done similar training.


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