TRID in the Weeds

by Alice Alvey for Mortgage Compliance Magazine
MortgageComplianceMagCoverAs we step into 2015, mortgage lenders, brokers, depositories, and vendors are at various stages of understanding and preparing for the TILA-RESPA Integrated Disclosure (TRID) rule (Rule). In an informal survey of various audiences over the last few weeks, it seems that roughly 60% are beyond the initial discovery phase and are actively discussing implementation issues. The percentage is lower than it should be because of the many small companies that lack resources and choose to wait for guidance from their origination software provider, investors, or wholesalers. A few of the big players have published their plans, but this is only a plan on paper.

During training and consulting, one of the most interesting aspects of TRID discussions is listening to who cares about what. Compliance officers are still reading, researching, and trying to identify what can go wrong and where. On the other end of the spectrum are the originators, who think it’s just a new form and are more concerned about how the three-day waiting period prior to closing is going to impact rate locks and realtor relationships.

It’s not easy to see into the weeds of this regulation by attending a few webinars. It takes hundreds of man-hours to finally get to a point where you have enough confidence in the rule that you can walk through actual day-to-day scenarios and see how it all plays out. The hardest reality is what I call ‘managing sometimes.’ The regulation has many nuances that require careful procedures to pick up on exceptions and don’t allow for creating a process that always occurs one way. Think of the Rule as three parts: the Rule itself, the Loan Estimate (LE), and the Closing Disclosure (CD).

The Rule has flipped changes in circumstances upside down, and a process that re-discloses with every change actually becomes a problem. The wording in the rule appears to use similar terminology such as zero tolerance, 10% tolerance, and no tolerance. These familiar terms cause people to speed-read through this section (because we’ve become excellent at skimming after thousands of pages of the Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) and its painful subparts). In reality, the new method for handling change is very different. We need to forget everything we’ve memorized over the last four years. Start with the mantra: ‘RESPA 2010 doesn’t apply, follow TILA 2015.’ Repeat this any time you start getting confused.
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