Preparing for Changes to the Mortgage Industry 07.6.2015 | Tim McCarney

The Consumer Financial Protection Bureau (CFPB) is implementing the new TILA-RESPA Integration Disclosure Rule (TRID) effective October 1, 2015. The objective of this new regulation is to implement easier-to-use mortgage disclosure forms that clearly lay out the terms of the mortgage for a homebuyer.

Under TRID, the Loan Estimate form replaces/combines the Good Faith Estimate (GFE) and initial Truth in Lending (TIL) disclosures. As per current regulatory guidelines, the Loan Estimate form must be delivered to the customer within three (3) days of loan application.

In addition, the Closing Disclosure replaces/combines the final TIL and the HUD-1 Closing statement. Under new regulatory guidelines, Lenders/Closing Agents will be required to issue this disclosure three (3) business days prior to closing. Any material changes (loan amount, product, APR) to this disclosure from time of issuance prior to closing will result in a re-issue of the disclosure as well as a new three (3) day waiting period.

Here are some things that our clients should be aware of:

  • The collaboration between lender and closing agent on behalf of the buyer will be more critical under TRID given the mandate requirement that the Closing Disclosure be delivered three (3) business days prior to the consummation of the transaction. WRESS (Weichert Real Estate Support Services) can offer a significant value added service through the management of the WRESS closing network.
  • Timeliness of a transferee receiving their equity amount is magnified. If the transferee receives their equity amount close to their home purchase and needs to change their mortgage amount based on that value, their closing could be delayed.
  • Clients should review their current policies regarding the verbiage around covered closing fees. The new Closing Disclosure eliminates the use of numbered line items (previously used on the HUD1-). For example, a company placing caps on the “800” line items on the HUD-1 would need to re-examine their policy. While the current HUD-1 includes “800” line items such as origination fee, credit report, processing, appraisal, tax service, flood certification, etc, the new Closing Disclosure eliminates the numbered line items and splits the fee sets into “direct lender costs” (application fee, underwriting fee, etc) and “required fees associated with the standard transaction” (appraisal, credit report, flood certification, etc)

Weichert Financial Services (WFS) has been preparing for this conversion for some time. Preparation began in March 2014 with the decision to transition to a new Loan Origination System, the Ellie Mae Encompass system, which is fully compliant with TRID. Weichert Financial Services choose. As of this writing, WFS has completed its system transition and is prepared to receive the TRID upgrade which will feature the new Loan Disclosure (replacing the Good Faith Estimate and the initial Truth in Lending Act disclosure) and the new Closing Disclosure (replacing the final Truth in Lending Act disclosure and the HUD-1).

WFS has identified its products and the internal and external parties affected by TRID and is updating its policies and procedures accordingly. Training for all WFS employees commenced in June, and WFS has engaged the services of Lenders Compliance Group, a leading mortgage industry compliance consulting firm, to provide TRID planning and preparation consultative services.

For any further questions on TRID or Weichert’s preparation, contact Vince Carida.

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Written by Tim McCarney

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Tim is Weichert’s Vice President of Marketing, responsible for keeping our brand strong and crafting our brand’s story. Outside of the office, he can often be found worrying about the Boston Red Sox.

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