Mortgage

Survey says: Mortgage lenders woefully underprepared for TILA-RESPA

Mortgage origination costs set to increase

Fully 41% of mortgage lenders report that they are not prepared to meet the August 2015 deadline to comply with the Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure Rule.

The figure is a result of a recent survey conducted by Capsilon Corp. at the recent Mortgage Bankers Association’s National Technology in Mortgage Banking Conference and Expo 2015.

“The survey results clearly indicate that many lenders don’t have the right technology in place to handle the requirements of TILA-RESPA, and are scrambling by hiring more labor to help close the gap, which only drives loan production costs higher,” said Sanjeev Malaney, CEO of Capsilon Corporation.

And the findings get worse.

Surprisingly, only 12% of respondents reported that their companies are “very prepared” to meet the August 2015 TILA-RESPA requirements.

The survey, which polled more than 100 executives from leading mortgage lenders, also revealed that four out of five of the respondents believe that their mortgagee origination costs will jump once TILA-RESPA comes into force.

Two-thirds of the lenders reported that they hired additional in-house staff or use third-party compliance firms in order to deal with burdensome regulations.

This cost data is consistent with recent Mortgage Bankers Association data that reports total loan production expenses increased to $7,000 per loan in the fourth quarter of 2014, from $6,769 in the third quarter.

By way of comparison, in the same period in 2012, it cost less than half of that, $3,324 per loan, to originate a mortgage.

“This is an unsustainable model, and lenders should be embracing technology to automate compliance and tolerance checks, not hiring more people,” Malaney said.

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