TRID: How do we indicate intent to release servicing if we haven't decided yet?
The new Loan Estimate requires lenders to indicate whether or not it will keep or transfer servicing. How does a lender do this if they don't know whether they will transfer servicing until later on in the process?
Big announcement today ... Steve Venti and I are leaving the mortgage business to enter the professional tennis circuit. April Fools!
Getting back to it ...
In confusion there is profit right? Well then the TILA-RESPA Integrated Disclosure Rule should be profitable for your company!
Here's one small issue that is coming up, and we wanted to clear the air so you can move on to more important issues.
Intent to Release Servicing
The TRID requires a lender to disclose whether it intends to release servicing at the time of the Loan Estimate (3 days after application) --the lender must check Yes or No (there is no "Maybe" option).
Lenders will need to select either:
We intend to service your loan...you will make your payments to us.
OR
We intend to transfer servicing of your loan.
But what about lenders who don't know at the time of the initial estimate whether they will release servicing?
Right - well, of course, this comes up as the first question. Many places don't know (at least for sure) whether they will or will not release servicing so early in the process. So what do you do?
What you do is this --> Just answer this question with your best guess (disclose no if you think you'll keep servicing and yes if you plan to transfer it). If anything err on the side of disclosing that servicing will be transferred.
To be compliant, all that is required (according to the CFPB) for full compliance is that the disclosure reflects the [lender's] intent at the time the Loan Estimate is issued. Comment to 1026.37(m)(6).
Someone asked the CFPB this question in official commentary, and this was the CFPB's response:
If a creditor does not intend to service the loan, then it should select the checkbox that it does not intend to service the loan. The [CFPB] believes that if there is doubt regarding whether the creditor intends to transfer servicing, consumers will be better served by a disclosure that the creditor does intend to do so, in order that consumers are on notice about that possibility.
But can I change my mind afterwards?
Yes. This asks your "intent" at the time of disclosure--it will be fine if you change your mind and decide to transfer servicing after all. There's only going to be a problem if they can prove you're intentionally misleading borrowers by incorrectly filling out the form. Otherwise, this goes to your "intent" at the time of disclosure--as opposed to your intent later on, and as opposed to what actually happens.
Is there any penalty for doing so?
No.
Is there any penalty for changing your mind and keeping servicing?
No.
**Long story short --> Don't stay up worrying about this issue ... it's not that big of a deal! There are bigger fish to fry!**
In other news:
The Senator Warren to banks this week, "Bring it on."
Need help with TRID? We're here for you, click here for a list of the different ways SCA can help.
The CFPB just released a new shopping toolkit, which you can find here. This walks borrowers through getting a mortgage, helps them comparison shop, and includes checklists and worksheets for borrowers to use when working with a lender
As this video explains, the CFPB is going to publish real-life stories banks .... stories that give the real story (from the borrower's perspective) behind a complaint
Have you seen the CFPB's proposed rule on prepaid? You can check it out here, but keep in mind this is only a proposed rule ... there could still be changes.
Are the rules of ethics the same for everyone? How do you determine where to draw the line. Peter Drucker in his book Managing Oneself, explains how to use what he calls the "mirror test." I guess there was a diplomat in Germany a hundred years ago with a very bright future. So long as he stayed in good favor with political leaders. But he threw away his career by upsetting King Edward VII when he refused to throw the king a dinner party. According to Drucker, "The king was a notorious womanizer and made it clear what kind of dinner he wanted." The German diplomat refused, being quoted as saying, "I refuse to see a pimp in the mirror in the morning when I shave." And that's the mirror test.
"I have a message for my fans. Whatever you want to do in this world, it is achievable. The most important thing that I've found, that perhaps you could use, is be passionate and enthusiastic in the direction that you choose, and you'll be a winner."
- Steve Irwin,
The Crocodile Hunter
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