Would it be an over-statement to say that the mortgage industry is in a state of chaos? Probably. Nonetheless, many are very concerned about how the Consumer Finance Protection Bureau’s (CFPB) mandated TILA-RESPA Disclosure Rule (TRID) will forever change the space. The deadline for compliance is August 1 and it doesn’t look like the CFPB is going to be granting any extensions.
“Successfully meeting the CFPB’s TILA-RESPA Integrated Disclosure Rule by the August 1 deadline is obviously a major concern for lenders,” stressed Justin Glass, Chief Digital Officer at United Wholesale Mortgage (UWM). “We are already in testing with our compliance and business teams. Our broker and correspondent partners know that they are in good hands when doing a loan with us. We’re ahead of the curve for August 1.”
It is safe to say that every lender is very concerned about being in compliance with the new disclosures. However, we at PROGRESS in Lending thought that we would dive a little deeper into this situation. We wondered how many other lenders, aside from UWM already have the new disclosures and are actually testing them already. In the end, this change is not just about the disclosures, it’s about how they are produced and presented.
After informally polling several lenders, we found that two-thirds (66%) in fact have not gotten the new disclosures from their document preparation or loan origination system providers. This is by no means a scientific study, but the fact that so many lenders are not already testing is a problem.
So, how do lenders get up to speed and ensure compliance on day one?
“In today’s regulatory environment, it’s more important than ever to make sure you are picking the right partners that can quickly deliver accurate solutions to meet your compliance challenges,” answered Dan Jones, Vice President of Technology at Churchill Mortgage. “At the same time, don’t assume those partners always have the best channels of communication between them. Be sure to step into the process and make sure all of your partners are working together to deliver the overall compliance package that you need.”
Jones is 100% correct. Too often lenders outsource everything to the vendor and just assume that the vendor is taking care of everything. That’s not always the case. Vendors are stressed, too.
Think about it: A lot of lenders have exited the space over the past few years, which means that vendors are fighting for more business when there are fewer prospects to actually attain new business. Also, the onslaught of new rules means that vendors are having to invest more money into updating their solutions just to ensure that their clients are in compliance.
What does all of this mean? The successful mortgage lender has to engage more with their vendors to make sure that their vendors will be in compliance and that they will be able to deliver the new disclosures early enough for the lender to actually test them out. Now is not the time to be shy. Now is the time to more directly engage with all of your vendors.