TRID Tips on Speeding-Up Closing
Who has time to waste? Take Alec Baldwin's advice from Glengarry Glen Ross and "Always Be Closing"
Mistakes happen when you're rushing through a stressful or
complicated scenario. Just ask the bank robber who used a personal check as a robbery note (yes, they caught him almost immediately). But speed is essential to a successful mortgage operation. With that in mind, here are some ideas for safely speeding up your mortgage process without violating any of the TRID requirements.
1. E-Sign ASAP, Even Before Application
Delivering docs electronically is a wonderful thing for mortgage department efficiency. One idea to get more out of this is to get E-Sign consent when working with borrowers before they apply, such as requests for pre-approvals or pre-qualifications. The E-Sign consent is valid for the whole transaction, and eliminates the awkward initial process of hoping they consent after sending the LE simultaneously.
2. Fewer Revised Loan Estimates
Revising Loan Estimates means less free time to work on something else. And every new LE opens a new chance for a mistake. Some shops have increased speed by reducing the number of unnecessary LEs delivered.
How? First, by doing a better LE the first time. This might mean avoiding taking an app too early, or simply by doing a more thorough job of getting all possible information to whoever is disclosing. For example, if the loan is closing in a trust, and we can figure that out up-front, that's going to save us redisclosing an LE later in the process.
Second (and the big one), is understanding when you are NOT required to deliver a new LE. A revised LE is just a tool to help the lender increase specific fees above tolerance limitations (also needed for rate locks). But most things on a disclosure are not subject to any tolerance limitation and thus do not require a revised LE - Loan Amount, Product Type, APR, Interest Rate, Property Taxes, Escrows, and on and on. (Although those things may indirectly trigger a revised LE by increasing a specific fee such as title insurance.)
Third is making revisions on a CD directly instead of an LE. The timing rule here is a newsletter all by itself, but in a nutshell, don't delay closing because of a revised LE - if you're that close to closing, you're allowed to make any change directly on the CD itself. (Remember that you can't deliver an LE and CD on the same day, so if you revise an LE late in the process, it could force you to wait an extra day to disclose the CD).
3. Order Appraisal Early
We know you cannot get payment for an appraisal before receiving intent-to- proceed, which you can't get before the borrower has received the LE. That sometimes takes weeks! Appraisal delays have been a problem this year. If you're willing to take the financial risk (because you can't ask the borrower to pay for it right away), there's no limit on how soon you can order an appraisal. You could order the appraisal on the same day the borrower applies for a loan.
This won't work for lenders that have a high number of applications that drop out before providing intent-to-proceed. Some lenders use this technique effectively by applying only to limited groups of borrowers; perhaps such as in all purchase transactions, or as in all transactions with a pre-qualification/pre- approval.
4. Issue the Closing Disclosure Sooner
The Closing Disclosure doesn't need to be perfect, it just needs to include all information that should be reasonably available to the lender. If there's a piece of information that you don't have, despite reasonable efforts to get it, there's nothing wrong with issuing a Closing Disclosure and making those small adjustments before closing.
There are also companies that will issue an initial CD before clearing the loan to close. I've heard the unwillingness to send a CD until the loan is absolutely rock-solid comes in part from not wanting to deny or counteroffer a loan after the borrower has received a CD - but if you're willing to handle those situations, there's no regulation stopping you.
5. Fix Clerical Errors Post-Closing
Imagine you're closing in a couple of hours. The closing attorney reports a misspelling on the CD somewhere. Non-numeric clerical errors can be fixed with a revised CD, eliminating the need to delay this particular closing to get a new CD out. (Just be careful that "clerical" has a limited meaning per TRID rules, and isn't as broad as defined by Webster's dictionary).
In Other News
Did you process any Military Lending Act files through the MLA website between February 9th and February 15th? If so, you'll have to do it again - there was a glitch on those days that affected 150 requests. See the press release here.
Things are going pretty well I guess - interesting and reliable colleagues, clients that are mostly long-time friends. I'd hit pause if I could, but things don't work like that ... Hey check out our new website (still at www.scapartnering.com).
Ever thought of writing your own weekly, monthly, or annual reviews? In an interesting take on the Trump-Cordray situation, this WSJ article "The Fastest Way to Fire Richard Cordray" gives the opinion that Trump might actually just be able to order him not to appeal the PHH decision, putting him in a position between refusing a presidential order ("cause" for termination) and allowing a decision to stand that says he can be terminated at will.
On My Mind ...
Does day-to-day thinking allow for industry disruption? Are we so focused onnext quarter's revenue that we forget to plan strategically, allowing Netflix or digital cameras to destroy our business model? Can we blame Blockbuster, Kodak, Xerox, Mutual Benefit Life Insurance Company, and those others for their failure?
Some think this could happen even in the heavily-regulated banking industry (albeit this regulatory could serve to slow the progress).
Whether you think it can or can't, you have to admit there are hundreds, if not, thousands of companies trying to do just that. Since the 2008 financial crisis, we've seen an amazing growth in financial services technology companies (fintech) arrive. All with different game plans, but all with the same goal: to "netflix" the current banking model.
"The key to everything is patience. You get the chicken by hatching the egg, not by smashing it."
- Arnold H. Glasgow
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**These are our opinions. We're not authorized, or willing, to express those of others.**