5 Last Minute Notes on TRID
Next week we'll be working with TRID. Don't worry, everything will be fine. You've been through plenty of changes, we'll get through this one, too.
Before we ditch TRID as a newsletter topic, here are five last minute thoughts for those still preparing for TRID on October 3rd:
1)ALTA Settlement Statement
Haven't heard about this? Well, you should check it out here ... The Closing Disclosure isn't a great replacement for the HUD-1; but in its defense, it's not supposed to be! The CD is a disclosure to the borrower that must be received several days prior to the actual closing. A lot can happen in that time ... enough that using the CD as evidence that the loan actually closed as described on the CD seems flimsy. So while the CD is always required, nothing is stopping a lender from using its own version of a settlement statement. That's where ALTA comes in, they created a new settlement statement to use now to replace the HUD-1. Note that there is both a borrower and seller version; have your attorneys use both to avoid disclosure of private borrower information to the seller. The ALTA settlement statement(s) will be signed by all parties at closing, similar to your current process.
2)Closing Disclosure Signature: An Investor Overlay
To be crystal clear, no regulation requires the Closing Disclosure to be signed. But nonetheless most investors will require this extra step to prove it was actually disclosed.
3)Is there a grace period?
Well, up until yesterday I would have laughed and said no. But R. Cordray came out yesterday and testified that the CFPB is planning to implement a formal hold-harmless period in writing to last 6 months. He "hope[s]" this will be officially released before October 3rd! But others walked away yesterday with a less enthusiastic interpretation of the Director's remarks.
So let's hope there is some relief coming in the next couple of days. What to look for when this is released? Make sure it addresses the civil liability associated with this rule. Even if the regulators agree not to punish us in the first 6 months, that doesn't mean much unless it requires a plaintiff's attorney to be just as nice when the borrower struggles to make payments on this loan 5 years from now. The scare with TRID has always been the civil liability, not just the regulatory enforcement. Any "hold harmless" period that does not protect lenders from civil liability will be of little help to lenders.
4)Importance of E-Sign
There will be two types of lenders post-TRID. Those that use electronic delivery and those that do not. Using electronic delivery will allow lenders to save precious days off the final countdown and enable last minute changes to the CD that might derail other lenders.
5)What does it mean to "shop?"
If you don't allow the borrower to shop for a settlement service, e.g., lender's title insurance, then that fee will be subject to 0% tolerance. To get credit for allowing a borrower to "shop," the lender must make sure to disclose a Settlement Service Provider List along with a statement expressly allowing the borrower to pick someone not on the list. If that list isn't in the loan file, you're going to be stuck with 0% tolerance even if you actually let the borrower pick the service provider.
Good luck!
In Other News:
Are you responsible for fair lending compliance at your institution? If yes, you should be familiar with the recent Hudson City Savings Bank case where a lender suffered substantial penalties for reverse redlining. Read through the summary and penalties here - note the lender was forced (in addition to a $5.5 million penalty) to make a staggering number of changes, such as opening 2 new branches and $25 million in a loan subsidy program!
Have you run across the new ABA president? Here's his YouTube video introducing himself
Who is grabbing more purchase volume, year over year? Depositories, non-depositories, or credit unions? An interesting chart from the national MBA.
Are you surrounded by past-based or future-based people? Ask yourself (or those around you) what Dan Sullivan calls the "R-Factor Question" (in his book How the Best Get Better (c) 2001): How could we handle this current crisis so that if we look back three years from now we'll consider this the best thing that ever happened to us? For example, what can we do to make TRID a good thing for our company? You can't change the past and it'd be nice to be working with a team of people looking to make the best of the future.
"The most successful, creative, and happy people ... are those who have a No-Entitlement Attitude. ... They constantly create opportunities for themselves, rather than waiting for someone else to do this for them."
- Dan Sullivan
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**These are our opinions. We're not authorized, or willing, to express those of others.**