By Xhevrije West
The one-month countdown until the TILA-RESPA Integrated Disclosure (TRID) rule is implemented is in full effect. This checklist of the critical items you will need to will not only ensure compliance, but more importantly deliver the electronic evidence when the Consumer Financial Protection Bureau (CFPB) comes knocking on your door asking you to prove what you said you did to prevent paying fines that could run up to $1 million dollars a day per infraction!
It’s déjà vu’ all over again. I remember in 2010 when the last major RESPA overhaul occurred and the response by everyone, (Lender, LOS providers, DocPrep companies, Title system vendors) was to build a GFE/TIL calculator; however, no one stood behind them and rep and warranted their accuracy.
Now fast forward to 2015 with TRID and you have the same parties building Closing Collaboration Portals (so far I’ve counted twelve) to support the online exchange of fee data prior to closing to ensure more accurate disclosures. The key issue again is who is offering a solution that has all the required steps, features and functions needed to ensure a complete and compliant process (not just the LE and CD) and rep & warrants it to protect the creditor (lender) against future compliance risk, audits or legal challenges.
Clinging to the old paper process is just not going to cut it anymore
So much focus has been on the forms, specifically the CD and the three-day delivery requirement but implementing a true compliant process requires confirmation and tracking of the following critical milestone events.
Application
• Intent to proceed
• Three-day delivery of the initial disclosure package, (not just the LE)
• Changed circumstances and re-disclosure (s)
Pre-closing
• Three-day delivery of final closing disclosure (CD)
• Why just the one form and not all like we do with the initial disclosures?
• Show receipt of delivery
Electronic evidence
• RESPA reconciliation to verify tolerance and other compliance checks
• Date & time stamp audit trail of all consumer communications
• Record retention requirement of three years on LE and five years on CD
Implementing a full electronic (eSign, eDisclosure) process from loan application to closing is the only way to truly be and ensure compliance. There is a reason why the CFPB and now FHFA is standardizing on the MISMO 3.3 data spec and that is because they are moving to support a full automated audit of the data file for compliance and not wading through hundreds of pages of the paper file to verify compliance.
Additional To Dos
Technology Vendors – of course you’ve been working with your technology vendors over the past several months to understand the changes made to their software and how to use the new functionality. However, some lenders that I’ve talked to eased up working with their vendors because they now had more time. Not a good idea.
Training – not only should you be working with your technology vendors to get trained on their software, but you should be training your own people on the new process. A lot of your staff will be involved with TRID in some form or another; make sure they all understand processes, policies and procedures.
Test, Test, and Test Again – you can’t do enough testing. Try to see where their might be holes in your own processes and ensure the right staff has tested and understands how to apply technology that is affected by TRID.
Keep a Watchful Eye – After October 3, there will be a lot going on internally. Just make sure you observe how things are progressing and make necessary improvements or corrections along the way.
Fines - Sure. The CFPB says it will be lenient regarding TRID violations at first, but you want TRID compliance adherence to be air tight from the get go.
Going Digital – only way to truly ensure data and document compliance and integrity
If this reg does not get people to move to and support a full eMortgage process, I don’t know what will. I guess when the CFPB starts auditing for QM, ATR and TRID in earnest and begin accessing large fines for non-compliance, maybe then the origination side, like the servicing side of the business will wake up and finally change the way they do business.
Editor’s note: Portions of Tim’s response appear in the September issue of MReport. To view his response and additional responses from Black Knight Financial Services, NetDirector, ARMCO, Pavaso, Mid America Mortgage, and IDS click here.
