How will TRID affect mortgage brokers in Massachusetts?
Whether you're a mortgage broker, operate a wholesale channel, or want to know what your competition is up to, here is some info on how TRID is going to affect the broker channel.
Every time the regulations change, or investors tighten guidelines, lenders wonder aloud- how are mortgage brokers doing this? How long can that business model survive?!
The upcoming changes to TILA-RESPA Integrated Disclosures aren't any different. The new law, among other things, combines the initial RESPA disclosure with the initial TILA disclosure. And some issues we're considering may (or may not) make it tough to be a broker.
Initial Concern About Major Shakeup
So the big question has been - mortgage brokers in Massachusetts have never been allowed to issue the TILA disclosure, that must mean they're now not permitted to issue the new Loan Estimate (which combines RESPA and TILA disclosures), right?? How can a mortgage broker survive without the authorization to issue the initial disclosures? What value are they bringing to the table if they're turning it over the lender that early in the process?
So Massachusetts Changed the Law
Would they survive? I don't know. And we're never going to find out because the Massachusetts Division of Banks (DOB) changed the rules.
Massachusetts law will now permit mortgage brokers to deliver TILA disclosures (starting August 1, 2015 with TRID). This was hidden (or at least not blatantly obvious) in the DOB's recent modifications to 209 CMR 32.00.
MA law now says under 32.19 that "Compliance with 12 CFR 1026.19 constitutes compliance with 209 CMR 32.19."
Translation?
Massachusetts allows you to do whatever Federal law says is okay Federal law happens to allow mortgage brokers to deliver the Loan Estimate
So, therefore, Massachusetts no longer prohibits mortgage brokers from delivering TILA disclosures
So that settles that!
Miscellaneous
But wait, there's more ... don't forget that:
The creditor (not broker) remains legally liable (100%) for any mistakes made in the Loan Estimate (broker doesn't have a lot of "skin in the game"). So it remains to be seen how many wholesaler lenders will give brokers the freedom to deliver the Loan Estimate, even though it's technically permissible.
Where a mortgage broker delivers the Loan Estimate, it will need to retain documentation proving that this was delivered on time and completed accurately for 3 years (which makes electronic delivery that much more convenient)
But TRID is still going to present some challenges for brokers (Just not any worse in Massachusetts than anywhere else.) Ponder this, for example:
A broker has one client. The client is simultaneously interested in (1) an FHA loan, (2) a conventional ARM, and (3) a conventional fixed. The broker has to coordinate with 3 different investors, of the overall 15 investors it does business with. Of the 15 investors, some allow the broker to deliver the Loan Estimate, some don't. So within 3 days of taking an "application" (with much less flexibility in defining this now) they'll need to have these disclosures delivered to the borrower. Yikes.
What are your thoughts? Does the broker business look better today than years ago? Worse? Sustainable for years to come?
In other news:
Just another thing for parents to worry about ... Chairman of Royal Bank of Scotland loses his job after his daughter posted a picture he had sent her on the internet. He had sent her a "selfie" of himself in a meeting with the caption "boring meeting"
Anyone lending out on the Cape or Martha's Vineyard? Hopefully vacation home sales are as good this year as last .... I didn't realize last year was a record year.
To be clear, Steve and I will not be quitting to play professional tennis, with one quit-witted commenter opining that this would represent a "double fault"
This Boston.com article makes the point that it may be harder to find a home than to get a mortgage ... it's true that inventory is low! (is everybody waiting for the spring to fix the damage from the winter before selling?)
When you're talking about building a team, you know you have to have "dreamers" AND "doers." No dreamers? You'll do lots of work but nothing will get accomplished. No doers? You'll have lots of great ideas but nothing will get done.
Here's another excerpt from Peter Drucker's "Managing Oneself":
"[A] planner may find that his beautiful plans fail because he does not follow through on them. Like so many brilliant people, he believes that ideas move mountains. But bulldozers move mountains; ideas show where the bulldozers should go to work. This planner will have to learn that the work does not stop when the plan is completed. He must find people to carry out the plan and explain it to them. He must adapt and change it as he puts it into action. And finally, he must decide when to stop pushing the plan."
- Peter Drucker
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