It has been nine months since the TRID disclosure requirements were activated. During that time period the industry has had the opportunity to resolve issues such as the potential for delays in loan closings, problems with accuracy of the disclosures and the corresponding ramifications. Recently issues emanated from the secondary market concerning the potential of assignee liability for secondary market investors.
While all of these issues are generating numerous news articles and commentaries denigrating the requirements, forcing lenders to delay closings and increasing the overall costs of originating a loan, it has also exposed the fact that our partners in this process are less than knowledgeable, and in many cases, downright ignorant of the new disclosure requirements and documents. I had the pleasure, or rather the displeasure of experiencing this over the past several months as my daughter and her husband sold one house and purchased another. We all recognize that these new requirements are intended to provide accurate financial information to the consumers in order to ensure that they “know before they owe”, but is that really happening. Here is just one example of what borrower’s experience.
My kids sold their then current home with no problem and found a home that they wanted to buy. Their loan officer was very knowledgeable in presenting various mortgage options and provided guidance to them for completing the application and they were able to understand the LE when it arrived. Now here I must admit that my daughter, having lived with a mortgage banker for most of her life, was much more knowledgeable than other borrowers. None the less, they found the LE very easy to understand.
The trouble began when the home inspection occurred and the inspector found a problem in the air conditioning. While this was obviously the sellers’ issue, the seller’s realtor increased the sale price of the property to cover the cost and told the kids that they could pay it with a personnel check at closing. Furthermore, she stated that if they didn’t do it that way, the lender was going to have to reissue the LE and that it would delay closing. Her reason she explained was because lenders had eight years since the mortgage meltdown and still couldn’t follow the new requirements. Of course, that didn’t happen.
Once the loan was approved and scheduled for closing this same realtor called them directly to “warn” them that they better make sure their buyer had received her closing disclosure and that it was accurate or they would not be able to close on their current home. Meanwhile they had received their CD from their lender and using the amount they would have to pay, had made all the final arrangements. The call about the buyer’s CD created a panic when they were not able to reach their buyer and the buyer’s agent didn’t seem to know anything about a “required closing disclosure”. They finally got this straightened out only to get a call from the closing attorney with their “final figure” which of course did not match the CD. It seems that he had taken it upon himself to charge them for different “inspections” that their lender had not required or included in their fees because they were actually the sellers. After much back and forth discussions with threats from both the realtor and the closing agent, the CD was deemed correct. Confident that everything was now “OK” they proceeded to closing only to find out that the realtor fees were five thousand less than they had been told. So at the end of the day, despite the lender’s requirements to give these borrowers’ the exact amount of their closing costs, the overall amount required at closing was wrong. More importantly, it was wrong not because of the lender but because of realtors and closing attorneys. And here in lies the problem. The fact that these entities are ignorant of TRID requirements, have no regard for what is best for the buyer but are only interested in getting paid, and have no oversight but are free to manipulate buyers and borrowers, negates anything the lender is required to do. While I have been told that the realtor lobby is the strongest one on Capitol Hill it is time to stop harassing lenders and start requiring that these parties bear their responsibility in ensuring that consumers do “know before they owe.”
About The Author
rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.