Monthly Archives: July 2015

Using TRID as Catalyst for Overhauling Entire Closing Process

monitor-734567_640It is quite the understatement that the new TRID requirements will result in significant changes to the home mortgage closing process. Replacing the important and long-standing Good Faith Estimates, HUD-1 Settlement Statements, and the Truth-in-Lending Disclosures will require substantial commitments of time and other resources. Indeed, studies have shown that, in preparing for TRID, 67% of lenders have increased in-house staffing or outsourcing of labor, and 82% are spending more on technology in 2015 than in 2014.

While major changes are almost always difficult, often times they can result in positives we do not see at the outset. And hopefully, such will be the case with TRID. Obviously it remains to be seen what will result from TRID and resultant changes. But undoubtedly, the transition to TRID will be most successful for those who understand fully all the changes it will effect, and also make the most informed and cost-effective moves in moving to the post-TRID world.

Whatever your specific role in the residential real estate industry – realtor, lender, loan originator, mortgage broker, underwriter, loan processor, or closing agent – you will be best served by acting with the utmost care and diligence. First, educate yourself as to TRID’s requirements and how they will impact the entire lending process – from the mortgage application to closing. Next, ask yourself what will be required to implement all changes as accurately and efficiently as possible. And finally, invest wisely to ensure the best practices for implementing all required changes.

Whatever your role in our industry, you should use this time of change to look at the entire scope of your operation. Be able to answer the questions of what roles need to be handled by individuals, and how many are needed for each. Also, understand what can be handled most efficiently by technology, and commit to an investment that can handle the present and also be adaptable for the future. When it is all said and done, you should feel comfortable that you are addressing all changes resulting from TRID, and in the process, creating a system for years to come.

As we all know, nothing is as constant as change. And this is especially true in the case of residential real estate. Perhaps now more than ever, we will find the truth of the notion that “failing to plan” is indeed tantamount to “planning to fail.” But by taking the appropriate steps now, you will place yourself ahead of the curve and in the best posture for the success you envision.

Source: Moving Beyond TRID: How to Automate TRID Compliance – And Your Entire Mortgage Workflow – Capsilon Corporation (www.capsilon.com/wp-content/uploads/2015/07/Capsilon-WP-Moving-Beyond-TRID.pdf)

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TRID To Extend Contract And Rate Lock Timing?

speed-32302_640-2By now, presumably everyone is gearing up for the implementation of TRID and its new disclosure forms, the Loan Estimate and the Closing Disclosure. The new regimen is set to take effect October 3 – just weeks away! And most in the residential mortgage industry believe TRID will meet the overall goals of providing home buyers with clearer “know before you owe” information, and do so in a more timely fashion than with current disclosures.

But experts are warning that the new requirements may prove costly – in both time and money. They cite three main reasons for their concerns: 1) the “learning curve” involved in becoming familiar with the new disclosures; 2) the development of software systems to effect a “best practices” implementation; and 3) the requirement that the Closing Disclosure must be provided to borrowers no later than three business days prior to closing. (The last one, while straightforward enough, may prove to be of greater consequence than some realize. A literal reading of the new rules would no longer allow for last-minute changes at closing. Under TRID, any adjustment to the Closing Disclosure would trigger a new three-day waiting period.)

Due to these inevitable delays, many believe that the typical 30-day contracts and 30-day rate locks will result (at least temporarily) in 45-day contracts and rate locks. (And some experts suggest TRID may result in even longer periods – up to 60 days.) This could prove to be a sore spot for all concerned. Many borrowers, after signing a purchase contract, already find themselves becoming impatient waiting for all steps to be completed before getting to the closing table. Moreover, lenders undoubtedly will be skittish about extending rate locks. Undoubtedly, they will charge a premium for longer lock times. Some estimate that extended time periods could cost borrowers billions of dollars annually.

Truth is, no one can predict the future. The key is to be prepared for a good measure of uncertainty regarding the closing process for the last quarter of 2015. Thus far, lenders have kept quiet about any definite plans regarding the whole matter, with most opting to take a “wait and see” approach. Given that the industry is entering unchartered waters, this is most likely a wise path. Perhaps the implementation of TRID calls for everyone to take an oxymoronic approach – rigid flexibility.

Source: Collins, Brian. “TRID May Force Lenders to Mothball 30-Day Rate Locks” July 10, 2015 – National Mortgage News

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HUD Issues New Rule to Affirmatively Further Fair Housing

washington-d-c-176243_640On July 8, 2015, President Obama announced that HUD has developed a new and significant program to enhance fair housing across the United States. In its own press release, HUD noted that the program will equip communities that receive HUD funding with data and tools to better assist them in meeting fair housing obligations established by the federal Fair Housing Act of 1968. HUD also stated that the program will provide additional guidance and technical assistance to facilitate local decision making on fair housing priorities and goals for affordable housing and community development.

In conjunction with the announcement, Julian Castro, HUD Secretary, said, “As a former mayor I know firsthand that strong communities are vital to the well-being and prosperity of families. Unfortunately, too many Americans find their dreams limited by where they come from, and a ZIP code should never determine a child’s future. This important step will give local leaders the tools they need to provide all Americans with access to safe, affordable housing in communities that are rich with opportunity.”

The new program is a result of recommendations of a 2010 Government Accountability Office report, as well as input from stakeholders and HUD program participants who asked for guidance, more technical assistance, and better compliance. HUD plans to phase in implementation of the new program, stating that grantees will have the time necessary for transition into its procedures. HUD emphasized that this new program will provide for a more balanced and effective approach, and will include targeted investments in revitalizing areas, as well as more housing choices in areas of opportunity, with the goal of enabling program participants to promote access to community assets such as quality education, employment, and transportation.

Finally, the new program clarifies and simplifies fair housing obligations, and creates a streamlined Assessment of Fair Housing planning process. This, it hopes, will help communities analyze challenges to fair housing choices and establish their own goals and priorities. To learn more about the program, please visit www.hud.gov/AFFH.

Source: U. S. Department of Housing and Urban Development (www.hud.gov)

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CFPB Proposes Extension of Deadline for Implementation of TILA-RESPA Integrated Disclosure

the-eleventh-hour-758723_640 (1)As you probably know, the Consumer Financial Protection Bureau (CFPB) is adopting new forms to replace the Good Faith Estimate, HUD-1, and Truth-in-Lending Disclosure forms currently in place. Noting that consumers often find the current forms to contain overlapping and inconsistent language, the CFPB developed the TILA-RESPA Integrated Disclosure (TRID) rule and has proposed replacing the current forms with two new forms – the Loan Estimate and the Closing Disclosure.

The new Loan Estimate will replace the current Good Faith Estimate and the initial Truth-in-Lending Disclosure form. It is to be provided to consumers no later than the third business day after applying for a loan. This new estimate form is designed to provide disclosures in a format that consumers will find easier to understand, and be more helpful regarding the key features, costs, and risks of the mortgage loan for which they are applying.

The new Closing Disclosure will replace the HUD-1 and final Truth-in-Lending Disclosure form. It is to be provided to borrowers at least three business days before closing. This new disclosure will hopefully provide consumers with the important information needed to understand all costs involved in obtaining a mortgage and closing the purchase of a residence.

The adoption of the new rule obviously marks sweeping changes in how the disclosure of the truth-in-lending and closing procedures are made to the public. The CFPB acknowledges that the new “TRID” or “Know Before You Owe” documents will require that everyone have the time and opportunities to become familiar with the new disclosures and requirements for compliance.

Originally slated for implementation on August 1, 2015, the CFPB recently announced a proposed amendment that moves the implementation of the new TRID rule to Saturday, October 3, 2015. The bureau has stated it believes that extending the time for implementation will hopefully benefit both the residential real estate industry and consumers with a more smooth transition. It also believes that scheduling the effective date on a Saturday may better facilitate implementation by giving the industry time over a weekend to launch new systems configurations and test those new systems.

Source: Consumer Financial Protection Bureau (www.consumerfinance.gov)

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