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On Saturday, Oct. 3, the industry implemented the most sweeping and significant changes in the history of mortgage banking. These changes impact the way we originate, disclose, process and close loans. Unlike previously, these regulations apply evenly to all residential loan originators regardless of who they work for. There is a general lack of understanding of the new requirements and their impact on originators, real estate agents, builders, title companies, settlement service providers and applicant/borrowers. The all-too-common statements of “I will figure it out when it gets here” and “Isn’t it just some new disclosures?” and my favorite, “I just don’t have time to attend TRID training” should concern us all greatly. Below are just a few of the areas likely to be least understood about TRID and the impact it will have on all participants in the loan process.
1. Impact of the realtor on buyers and sellers. Do they know they cannot write a 21-day or even 30-day contract on or after Oct. 3rd? These new regulations are strict and confusing to implement, and timing requirements around the Loan Disclosure, and specifically, the Closing Disclosure make closing within these windows extremely unlikely. If realtors are not setting proper expectations and contract terms, there will be many disappointed and misinformed buyers and sellers. It’s also fair to assume the realtors’ failure to understand and set expectations will somehow become the lenders fault when the loans cannot meet the contract closing date.
2. The need for policies and procedures. Starting with just the application date. Have all originators spent time defining and documenting policies and procedures for something as basic as being able to defend their “Application Date.” The Application Date is now defined differently than it had been in the past. Incidentally, this is covered in TRID training at great depth.
3. Setting dates. The need to establish specific dates, events, policies and procedures that will subsequently have to be defended to state or federal examiners, or to other parties such as lender/investors and warehouse lenders, only scratches the surface of required TRID knowledge.
4. Adhering to the new rules. On Oct. 3, any requests for credit in pipelines that do NOT have a GFE and TIL (and for broker loans a subsequent TIL) will not be protected under the OLD rules. If any of those requests contain the new six elements that make up an application, they will now become Applications under TRID and will be expected to have a compliant LE issued by no later than EOD Wednesday Oct. 7.
5. A new timetable. Plan for seven to 10 days before expected Consummation (closing date) to be working on the final Closing Disclosure. Anyone who does not understand this should quickly register for TRID training.
It is likely those of you taking time to review this magazine and read this brief editorial have already invested in TRID training. My greater worry is for those who are too busy to invest in TRID training and in their business.
Keith Bilodeau is senior vice president of Wholesale Production at Freedom Mortgage. With more than 30 years of experience in capital markets, operations and production, Keith offers unique expertise in helping mortgage professionals grow their business by leveraging Freedom Mortgage’s technology and programs. He may be reached by e-mail at [email protected] or visit www.freedomwholesale.com.
Lender NMLS ID: 2767. Freedom Mortgage Corporation, 907 Pleasant Valley Avenue, Suite 3, Mount Laurel, NJ 08054.
This article originally appeared in the October 2015 print edition of National Mortgage Professional Magazine.