Part 2: Timing and Delivery of Closing Disclosure under TRID
More research into TRID and how lenders will adapt processes.
Last week we discussed how important Timing is with the TRID Rule. And we shared some simple thoughts on how you may want to deliver the Closing Disclosure to minimize damage. This week, we want to piggyback off of that discussion and discuss a related issue: When you don't need to delay closing because of a mistake with the Closing Disclosure.
As a brief recap, we discussed last week the new 3-day waiting period for delivery of the Closing Disclosure, and used an example where one poor borrower suffered severe delays to her mortgage closing. (Add 3 days mailing to 3 days waiting, throw in a holiday and then one small mistake that starts the process all over again. Yikes!)
So with the timing requirements already so tough, we figure we might as well avoid making it any worse unnecessarily--so we'd like to summarize when you DO NOT have to delay closing under TRID.
Fixing Mistakes Before Closing (Don't Add Waiting Period Unnecessarily)
First of all, a new 3-day waiting period is NOT required where the Closing Disclosure is re-disclosed to fix a mistake or make a change unless one of the following applies--
The APR changed (up or down) by 1/8
The product changed (ARM to fixed)
Prepayment penalty added
In cases where a new Closing Disclosure is delivered prior to closing, keep closing on the same schedule and DON'T delay unless one of these three triggers exist. Just get the CD fixed and close on time!
Fixing Mistakes After Closing (Instead of Delaying Closing to Fix)
Problem - what if it's on Saturday and no one is at the Bank? Most lenders appear unwilling to allow attorneys to deliver the CD (now that doing so is 100% the lender's liability). So the point we want to make is that sometimes closing can go forward even with a CD that must later be fixed.
(1) Clerical Mistakes
Closing can proceed with a CD that contains non-numerical clerical errors; the lender does not need to provide a revised (corrected) CD before closing. Instead, the lender can deliver the original (wrong) CD and then fix the mistake after closing.
This must be fixed within 60 days.
The trick will be defining "clerical", which is considered something that does not affect a numerical disclosure and does not affect items on the Loan Estimate or Closing Disclosure. We do have a couple of examples to work with. For example, the wrong name for the appraisal company listed on the CD would be clerical. Another example given is that the borrower's property address would not be considered clerical because this affects the delivery requirement. Looks like a pretty fine line!
(2) Other Mistakes
Another exception to keep in mind is this: If the borrower actually pays more than he/she is supposed to, the lender can cure this mistake after- the-fact by (a) refunding the borrower and (b) providing new disclosures that reflect the refund within 60 days of closing.
Again, this might also help avoid panic attacks at or around closing. Perhaps this allows for a bit of the 'ready, shoot, aim' approach? (I said "A BIT"!)
In other news:
Relying on the so-called "administrative" exception to avoid paying your loan originators overtime? Sorry about this .... If you remember, the DOL said in 2006 that originators are generally exempt, then in 2010 reversed its opinion and said originators are generally not exempt. THEN an appellate court put the 2006 opinion back in place. NOW the US Supreme Court (which has the final say) has put the 2010 opinion back in place. In other words, originators are generally not exempt from overtime requirements, at least not under the "administrative" exception. More on this next week!
More important news from the courts, the Supreme Court recently held that a borrower need only state his intention to rescind within the 3-year statute of limitations (rather than actually file a lawsuit) to claim his right to rescind where the lender incorrectly discloses the right to rescind. Here's a good article summarizing the issues that this presents (thanks to Brian Bacci for sending that along), which includes (a) problems related simply to borrowers being more likely to bring rescission actions and (b) how lenders will decide to respond to borrower rescission notices now.
Remember how you drifted away from your college friends? How important is face-time and simple proximity to strong relationships? That's why successful lenders often support originators by entering into desk rental agreements with realtors. If you need help making sure you're RESPA compliant, give us a call and we'll help, but there's no reason not to explore opportunities like this.
Do you work in a great place? How do you know? I read in the Harvard Business Review recently 5 myths for making a great workplace. According to the HBR, here are those things that, surprisingly, are NOT required to have a good place to work:
Conflict is rare - actually, conflict and debate can be productive and lead to better results.
People are incessantly happy - in fact, trying too hard to force employees to suppress negative emotions can backfire, with people failing to share important opinions
The office is full of fun things - according to HBR, your office doesn't need to be an "amusement park" for people to be happy and productive
Mistakes are few - I think the number of mistakes is less important than how we respond to them. A workplace can be great, while making mistakes - so long as it's a result of innovation and pushing boundaries and lessons learned (the hard way), ultimately leads to greater productivity (and fewer mistakes!)
They hire for cultural fit - this may seem great at first, but according to this article not so to the extent it reduces diversity of opinion.
"If you do what you've always done, you'll get what you've always gotten."
- Tony Robbins
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**These are our opinions. We're not authorized, or willing, to express those of others.**