Are you relying too heavily on the 60-day window to cure TRID errors?
Hey it's great that we can fix errors within 60 days, but is that necessarily good enough?
As you know, the TILA-RESPA Integrated Disclosure Rule allows lenders to "cure" certain mistakes within 60 days of closing. So is this a get out of jail free card or are we missing something?
The Question
Is there a catch? Can we really ignore all kinds of errors so long as we fix them within 60 days?
The Short Story
No. Every lender should be doing the best it can (taking reasonable efforts) to make sure Closing Disclosures are correct before the borrower closes on the loan.
The Long(er) Story
Relying too heavily on the 60-day window to cure errors is not prudent because (a) we're not 100% sure that all errors can be cured and (b) even if the TRID cure is that large a gaping hole, certainly that would be considered an abuse of the plain language in a manner harmful to the consumer (so as to constitute a violation of the flexible UDAAP rule).
The basic rule to remember regarding Closing Disclosure accuracy is this: Make sure the Closing Disclosure is accurate before the loan closes. Whether it's a spelling mistake or if pre-paid taxes are off by $1.85 - the answer is the same - make sure it's fixed before closing.
But there are two "cure" provisions post-closing (putting aside the unusual scenario of a fee actually changing post-closing). Both are found in 1026.19(f) (2):
Changes due to clerical errors.A creditor does not violate paragraph (f) (1)(i) of this section if the disclosures provided under paragraph (f)(1) (i) contain non-numeric clerical errors, provided the creditor delivers or places in the mail corrected disclosures no later than 60 days after consummation.
Refunds related to the good faith analysis. If amounts paid by the consumer exceed [good faith], the creditor complies with [TRID] if the creditor refunds the excess to the consumer no later than 60 days after consummation, and ... delivers or places in the mail corrected disclosures that reflect such refund no later than 60 days after consummation.
Let me answer the original question with another question - is it possible to have an error that is neither "clerical" or a "refund related to the good faith analysis"? (Remember that "clerical" is defined VERY narrowly - most mistakes will not be clerical under the TRID definition). If so, does that mean we are not required to issue a correct Closing Disclosure? Or just that we're not as safe as before?
So it's possible that the 60-day cure provision isn't as broad as we think, but the fact of the matter is that we just do not know for sure right now.
All of this just to say this -- don't rely too heavily on the ability to cure TRID mistakes. Best bet is to get accurate Closing Disclosures out in the first place.
In Other News:
We're sending our gambling man Paul Bates to Las Vegas next week for the Encompass conference. If you're going, look him up! If you're not going, but want someone to ask a question for you, shoot him an e-mail (e-mail is copied below).
Struggling to read the Federal Register? There's really no need to inflict that kind of pain on yourself any more - try out the CFPB's "e- regulation" for a much easier to read format - http://www.consumerfinance.gov/eregulations/
Did you hear about the CFPB's "no action" letters for innovative products? Here's the announcement.
SCA Shameless sales plugs (not a regular item - just had to share a couple of things - don't think less of me!)
Are you a convert from EasyLender to Mortgagebot and miss those nifty easyReports? Well you may want to call my colleague Paul Bates - pbates@scapartnering.com - as he sent me this e-mail last week - "Also, I have officially conquered the Mortgagebot Datamart reporting. The beast has been slayed! Half the code, and better looking results!" ... not 100% sure what all this means but he's pretty excited about it!
Do you need underwriters? We've always been known as a staffing agency but it's even hard for us to find qualified people(with rates having been this low for this long). But one alternative might be outsourcing some services. For example, you could outsource the appraisal review function to us - at an average of 1.5 hours for an underwriter to complete, outsource 5 per day to us and that's the equivalent of 1 full-time underwriter!
How much value is there in forcing yourself to summarize a complex topic? Too many times we use 1,000 words when 10 would suffice. It's too easy to get "lost in the weeds."
How do we force ourselves to do this? Well, in my profession I write a newsletter that everyone stops reading at 800 words!!
There are plenty of advocates for the "leadership 1-page." They argue that the most important things to your business success shouldn't need an Excel filling 900 KB of space on your computer. In fact, many believe they should fit on one piece of paper. You shouldn't get lost in the weeds if you've put everything onto one piece of paper!
There are also those who use "mind mapping" (whether by hand or software) to map out all the current projects that the company is involved with. Some call this a dashboard, but there is certainly an incredible value in reducing your entire organization into a framework that can fit on one single "map" or piece of paper. And you can use popular mind-mapping software such as X- Mind to do just that.
"If you're going to achieve excellence in big things, you develop the habit in little matters. Excellence is not an exception, it is a prevailing attitude."
- Colin Powell
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