Since the integrated mortgage disclosure rules went into effect last October, there has been a nearly daily deluge of horror stories in the mortgage media about lenders and real estate agents having to delay deals because they were unable to have the loans in compliance by the scheduled closing date. And many investors say they’re rejecting loans for purchase because the loans don’t comply with the new TRID rules.
I’m happy to tell you that not all of us are experiencing this pain. Either we’re operating on a different planet from the rest of the industry, or we’re doing something right. We like to think it’s the latter reason.
Rather than spending our time complaining about TRID, we view compliance with the new disclosure rules as an opportunity to better serve our customers and take market share away from our competitors. It’s working. The changes TRID brought to our industry fundamentally changed many of our basic workflows for the better and are now an important part of how we think and how we get new business.
Less than three weeks — 17 working days to be exact – after our first purchase loan under TRID was received last year, we closed it and funded it. Since then we’ve been closing loans on time – within 30 to 45 days – as we always have.
How did we do it?
Three simple words: Training, training, training.
We realized early on that the changes mandated by TRID would require intensive employee training and loan origination system enhancements. We dedicated a tremendous amount of time and money towards making sure our operations were prepared, and we continue to learn and get better at it.
Our compliance manager did an outstanding job making sure everyone in our operations – from information technology to underwriting to processing to closing to the audit department – knew what was coming and was trained properly on the changes and knew exactly what they meant.
We made sure that our people were invested in making sure we got it right. We didn’t want to see delays in our closings because we wanted to maintain the momentum that we had gained over the previous two years to grow our brand and continue to serve the clients that we deal with on a daily basis. From the originator who takes the initial loan application to the post-closing department, we all have the same sales-driven focus on closing loans on time, every time.
Once we felt our operations people were ready, we then took it to our loan officers and retail branches and made sure they were properly trained.
Delayed closings are not acceptable
The first thing we had to do was dispel from the notion that we would no longer be able to close loans within the customary 30 to 45 days. Everyone in the industry, it seemed, had been led to believe that the new norm under TRID would be 60 to 90 days. That was not acceptable to us.
Instead, we explained the process and made sure our LOs understood what was important that had to be done and to work with our operations people to continue to meet those closing dates and minimize the effect on the borrower as much as possible.
We are still closing loans within 30 to 45 days of contract. If a borrower doesn’t cooperate or we get bad weather or a weak appraisal, that might delay the closing by a few days, but for the vast majority of loans we are meeting closing within 30 to 45 days.
Taking it to the Realtors
From issues that were brought up during our training sessions and suggestions we got from our sales force, we then decided to offer training sessions to educate real estate agents in our retail markets. You’d be surprised by how many Realtors lacked the knowledge or training on TRID.
We met with real estate agents in groups as large as 65 to offer training to them on what they needed to do to make sure we could close on time.
Our training alerted them to potential problems that could delay loan closings. Now, if they know what’s going on and if they do come across a road block or a hiccup, they will understand why the problem happened and what they can do to avoid it next time. They still strive to meet the closing date, but they are now willing to tolerate a short delay because they understand why it occurred rather than being completely in the dark.
Not only did the Realtors walk away with a greater understanding of the regulations, but as a result of our training we have been able to pick up business from several agents who have referred more of their clients to our LOs because they have confidence that we know what we have to do to close on time. How we perform under TRID will be a key reason why a referral partner will choose us over another lender.
What’s left after training? Hands-on training, with “live bullets.”
Once we started to get actual loan applications that had to be settled under the new rules, we continued to train our team to make sure that any errors that were being made don’t happen in the future.
The role of technology
What role does technology play in TRID compliance? It certainly has an important role to play, but not as much as human training.
Our IT department made sure that the loan origination system we use, Encompass, was up to speed. We attended many off-site Encompass training sessions to make sure we understood how the rule changes were going to impact our LOS and how we work with it.
You certainly have to be comfortable with the technology you are using, but even more critical is making sure the data you are entering into the system is correct and compliant. You can’t rely completely on the technology without first making sure the people who are entering the data understand what they are entering so they can double-check what the LOS is telling them– and if something is in error, they can fix it. You’ve got to have the human understanding first and not rely completely on the technology to tell you that it’s right or wrong.
The issue that we’ve seen with companies that are still struggling with TRID three months later is that they didn’t invest the time and money in training their employees in how to input data into their system so it comes out with compliant results.
Loan sales? No problem
Do we still have some problems dealing with TRID? Yes. We still have some disclosure bugs to fix. We still have questions regarding mortgage insurance. We do have issues with about five percent of our loans. But from what I hear from others in the industry, they’re having trouble with 30 percent to 40 percent of their loans.
We’ve seen the reports that some big loan investors are reluctant to buy loans that have TRID defects, including a major bank buyer that reportedly has been rejecting 90 percent of mortgages being offered to it because they contain TRID errors.
We have not had any issues with getting our loans purchased by investors and aggregators. Since TRID became effective last October, we haven’t had a single loan rejected for purchase because of a TRID defect relating to an operating system error. In fact, we have not had one closed loan deemed ineligible for purchase.
I saw a great quote the other day from Ralph LoVuolo Sr., a mortgage industry coach, that perfectly summarizes what our approach to TRID has been all along.
“The issues are not the laws, rules or regulations that are imposed by the government,” he said. “The issue is proper training. Training is always the issue. When people are properly trained and work together as a team, with the client being their first priority, the system works.”
Long before anybody heard of TRID, our whole company was centered on one thing: close loans on time. TRID has certainly made that task more challenging. But having that philosophy in our DNA has certainly made the job easier for us.
About The Author
Scott Alexander is the Operations Manager of Assurance Financial in Baton Rouge, Louisiana. After working with Wells Fargo for 18 years in the consumer finance, mortgage and banking divisions, Scott joined Assurance in 2010. His primary task initially was to create an internal underwriting department and to obtain full USDA, FHA, and VA underwriting authority. In addition, he worked to secure full correspondent delegated authority with national lenders. In 2012, Scott was promoted to Operations Manager and now oversees the underwriting, processing, insuring, disclosure, and closing departments for Assurance Financial.