Should Mortgage Lenders Support TRID? Dare we ask if there is a choice? Because, like it or not, at this point in time, TRID is the LAW. But what the heck is TRID?
TRID is a happy resident of the United States Federal Government. More specifically, "the Consumer Financial Protection Bureau (CFPB) is a unit of the Federal Reserve System charged with protecting families and honest businesses from illegal practices by financial institutions and ensuring that markets for consumer financial products and services are fair, transparent, and competitive." That sounds good, doesn't it?
You could call it "Acronym City". Why? TRID, RESPA, TILA, CFPB, KBYO. What do they mean? More importantly, what do they do?
TILA Truth In Landing Act
RESPA Real Estate Settlement Procedures Act
TRID TILA-RESPA Integrated Disclosure (yeah, an acronym filled with acronyms!)
CFPB Consumer Financial Protection Bureau
KYBO Know Before You Owe, also known as TRID (?!!! These agencies seem to be chasing their own tails!)
But wait, we're getting lost in the weeds, aren't we?
After the Sub-Prime Mortgage Debacle (2008) and the Great Recession (2007- 2010), the Federal Government understood that increased regulation of financial entities and markets was needed to prevent this from happening again. Being bureaucrats, they came up with some predictable inventions. They laid out some TRID Guidelines and some TRID Rules. This is not a complaint, just an observation, because the remedies work. There are TRID Benefits.
Top Benefits Of TRID
From our current vantage point, over six years after TRID became law, its benefits are clear. And while they were put in place to protect the consumer from predatory practices on the part of lenders and brokers, everyone has been the beneficiary.
TRID mandates better lender-borrower engagement. Unlike the time before TRID, the lender is the responsible party for creating the Closing Disclosure. In the past, this was the responsibility of the closing agent, and there were no objective, definitive methods for making sure that the disclosure was complete and accurate. Now there is more opportunity for two-way communication throughout the lending process.
TRID means more interaction with customers - TRID stipulates more collaboration with customers, which offers the chance for a better relationship. Since most customers are ignorant of the nuts and bolts of the entire process, the lender has the opportunity to build the relationship by communicating the intricacies to the borrower.
TRID means more informed Consumers – all of this exposure to the process of closing on a real estate transaction will naturally make for a more informed buyer. Less time spent on explanations, less likelihood of errors in declarations, and more minor dead-end conversations about things that aren't clear to the borrower. And that becomes an advantage for all parties in the transaction.
TRID means better borrower questions – not having to explain the process from the ground up means that the entire sequence of events in the closing is more streamlined, which means it happens quicker, and with fewer interruptions. Saving time is never a bad thing. After all, time is a precious commodity for lenders and borrowers alike.
And speaking of saving time, did you know that a Mortgage Process Outsourcing partner can make TRID conformity and the entire Mortgage Loan Processing workflow move faster, with fewer errors, and for a lot less in costs? More about that later.
TRID Rules For Mortgage Lenders
Structure makes the process predictable and safe. And, of course, there are rules. But they're followed quickly enough. Take a look:
Application fees? Gone. That's right, no more application fees.
Quick delivery of the loan estimate? Three days after the loan application, the lender must issue an estimate of the cost of the loan.
The waiting period between closing disclosure and signing? Again, three days. The lender must provide the closing disclosure at least three days before signing.
Contact information. The lender must provide their contact info and the contact info of the loan officer.
Maintenance of estimates and disclosures. The lender must keep on file all estimates and disclosures for three years.
TRID. Embrace it!
While TRID is more regulation, and some people say there's too much regulation in business anyway, others see it as a device to keep things on an even keel. TRID has eliminated "sticker shock" for borrowers and thus benefitted lenders. There's no lingering ill will on the part of the home buyer since all the costs are out in the open. Full disclosure works both ways. A happy customer is more likely to come back to a lender that provides a satisfying experience when contemplating buying another home. And improving on what has been historically the sometimes-troubled relationship between lender and borrower is a win-win.
But when both parties understand the game's rules before they step onto the playing field, there shouldn't be any surprises when the bill comes due. And if you need a facilitator or just another set of eyes and ears to make your entire mortgage loan processing workflow move to the next step, consider a partnership with a Mortgage Loan Processing Outsourcing firm.
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