Even before the TRID rule took effect last year, RESPA and TILA-related issues were prevalent throughout the industry. For example, at the end of the first quarter of 2015, ComplianceEase data showed that 17% of loans had TILA violations and 6% had RESPA violations.
Now under TRID, lenders have significantly greater liability for the timing, completeness, and accuracy of the Loan Estimate and the Closing Disclosure: it’s not enough just to compare the last LE with the final CD. This leaves open a potential for significant violations and material defects under TRID, particularly given the current estimated tolerance failure rates.
According to the CFPB’s published TRID examination procedures, a lender “may use a revised estimate of a charge instead of the amount originally disclosed if the revision is due to one of the reasons” specified in the TRID Final Rule. In a nutshell, this means TRID compliance has shifted the tolerance focus away from disclosures and toward individual fees.
To stay in compliance, many companies are updating their software and processes. However, reviewing only a limited set of disclosures can also result in over-refunding fees in an attempt to address suspected tolerance errors. With historically thin margins in the mortgage industry, small errors can have a large impact on profits and competitiveness.
One of the ways to minimize that impact is through the Integrated Compliant Closing solution offered by ComplianceEase. The company’s document generation product ClosingXpress is now integrated with ComplianceAnalyzer and TRID Monitor and, when used together, enables lenders to originate mortgages tailored to their specific license types and exemptions and to correct compliance defects before delivery.
ClosingXpress produces disclosures compliant with TRID and all required federal, state, and secondary market investor document sets. ComplianceAnalyzer with TRID Monitor was designed for multiple disclosures. In combination, these products can generate all documents for a loan while monitoring the loan for delivery timing sequencing, fee names, tolerances, changed circumstances, and reasons for re-disclosure, as well as post-consummation cure analysis — ensuring compliance by detecting and helping correct fee tolerance issues.
Additionally, ComplianceAnalyzer and TRID Monitor provide a third-party audit report that may carry greater weight with secondary market investors and regulators than reviews performed by a lender’s own personnel or systems.
“Lenders turn to technology solutions to help automate and ‘back-stop’ compliance, gather the data that goes into the LE from various vendors, compute the LE accurately, and deliver it in a timely, trackable fashion to the borrower,” said John Vong, president of ComplianceEase.
“When used together, ClosingXpress, supported by ComplianceAnalyzer and TRID Monitor, compares all disclosures to make sure that fee variances are within tolerance. Plus, ComplianceEase creates and maintains products ahead of upcoming regulations and industry changes, and stays in close communication with our clients to ensure an optimal user experience.”
An intelligent workflow lets users see as much or as little as they choose: a RiskIndicator score and pass/fail summary, or a deep dive into calculations and regulations.
Other features of ComplianceAnalyzer and TRID Monitor include:
- Audit all disclosure timing requirements
- Track dates and delivery methods
- Track final closing documents
- Offer loan-level reports with regulatory detail and cure analyses
- Calculate refund and deadline remediation
- Calculate all tolerances
- Maintain a complete audit trail
ClosingXpress leverages a complete document library specifically developed for the needs of residential mortgage lenders, which was originally developed by Mortgage Banking Systems (ProClose). The 6,000+ documents are monitored and updated by in-house document specialists, internal legal staff, and outside counsel, with all documents replicating industry-standard Uniform Instruments. After ComplianceEase purchased ProClose in 2015, the system has been seamlessly integrated with ComplianceAnalyzer, creating the only independent document preparation platform embedded with the most adopted compliance engine.
The audit trail created when these products are used together not only puts lenders ahead of the curve on compliance, it also detects and helps correct fee tolerance issues. The result is a more efficient, accurate process that lenders can rely on.