Don’t be mistaken, TRID is not over. In the coming weeks we’ll see TRID loans start to close and at that point we’ll truly know what the story is when it comes to how ready the industry was. Jason Roth, Chief Technology Officer at ComplianceEase, had this to say when discussing this big industry change:
“The core of it is that under RESPA, most lenders and technology systems rely on the fact that the RESPA tolerance is disclosure centric. The difference that we see is the regulation looks to justify changes to individual fees. You might think: Isn’t it the same thing? The difference that we see is that the regulation and examination look to revised estimates for specific charges so you can end up in situations where there might be one thing that causes a change in the fee and another thing that occurs to another fee or even the same fee. So, lenders have to keep up with every change without having to re-disclose after every fee change. The expectation is that there is a documented reason for every fee change, so everything has to be tracked and traced. Up until this point you have not had to track things with this level of granularity.
“The bureau is going to care about the basics first,” Roth continued. “The bureau will be looking at this from a consumer standpoint. The bureau is going to want to know that the information is accurate and the disclosures are given at the correct time. Do the systems and procedures that you have in place result in timely and accurate disclosures? That’s what the bureau is going to be looking at initially. Early disclosure is very important to the bureau. You can’t know before you owe unless you receive a timely disclosure.”
Do technology vendors and lenders understand these nuances? “We have a fair amount of interaction with the different system. The real question is: How does the industry feel the LOS will manage fees appropriately for them,” Roth answered. “We surveyed lenders and 20% felt that their LOS is managing very little of their TRID requirements automatically. There is a lot of work that has gone into industry systems, but when it comes to having a credible compliance system, you have to ask if you have a system that will prevent you from being out of compliance electronically. Most systems can process the disclosure under the new requirements, but they may not be ready to electronically manage that so you are not relying on people keying in the right data at the right times.”
Many saw the three-month extension as a saving grace for the industry. Much work was still needed in August. “The three-month extension was very beneficial. TRID is an experiment. Forecasting exactly what is going to happen when is very difficult. The bureau broke the mold and rearranged the functionally of how closures are going to be conducted. We have sent out info to our partners to let them know what new information they will have to capture so they can pass an audit done by our technology.”
The large providers have been working on this for a long while. However, you’re not going to get to an answer as to if they are really ready until after the deadline. System conversions take time. There are bugs that are worked out over time.
“We needed to make sure the new way of doing things would reconcile with all of the other state and federal guidelines because those rules and regulations are not going away,” concluded Roth. “We had to make sure that the new TRID regime still allowed for compliance of all the other rules and regulations. We’ve also created a standalone examination report so everything is in one place, in one report, so the regulator can see every change that happened to the loan. The emerging question over time will be if lenders have systems that are able to track the granularity of what went into every fee change.”
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