The most recent rule handed down by the Consumer Financial Protection Bureau from the Dodd Frank Act of 2010 is the TILA-RESPA Integrated Disclosure Rule, which is effective for new applications received on or after Oct. 3, 2015.
The rule itself imposes changes to disclosures required under TRID and to timing requirements and fee tolerance limits for specific transaction fee categories. The new legislation is expected to ensure borrowers better understand the information being conveyed and to ensure borrowers are better able to comparison shop when obtaining financing.
The newly integrated TRID disclosures have disrupted the industry, challenging lenders to integrate the Loan Estimate (LE) and Closing Disclosure (CD) into their LOS systems, track and calculate revisions and fee changes, and accommodate the new timing requirements for the receipt of the new disclosures.
While the industry is accustomed to regulatory changes, it has typically been slow to adopt technological advances. For those of us who already offer a digital mortgage, the TRID implementation has been less painful.
The Digital Mortgage - the latest home loan innovation- has drastically streamlined regulatory implementation and improved the lending experience for consumers.
For example, with borrowers now in control of their 1003 application, program choice, approval and doc upload, milestones are tracked and all transaction stakeholders are clear on when the initial LE must be provided to the applicant.
Also, to ensure compliance with the CD timing and accuracy guidelines, we’ve built a digital communication platform to manage pre-closing communication between our closing department and the settlement service providers.
The platform allows the closing department to virtually coordinate with settlement agents very early in the process, producing an accurate CD more than 10 days prior closing. While the borrower must receive the CD three business days prior to closing, technology allows us the ability to provide the CD up to seven days prior to consummation.
With one week lead time, borrowers are able to review the CD and lenders are working well within the given time restrictions. Prior to TRID, the HUD-1 was finalized the day before, if not the day of closing.
More importantly, the result for consumers has been improved service, convenience-based lending, fee transparency, decreased processing times and greater control over their lending process.
A vast improvement from the convoluted process of the past, the digital mortgage allows consumers to complete their own 1003 application, initiate AUS findings, upload and track document requests, and communicate with mortgage teams throughout the process.
With borrowers now driving their lending process, fees associated with mortgage transactions are better understood and transaction apprehension has been alleviated. These benefits position both lenders and consumers for successful transactions.
According to a recent randomized survey we conducted, it takes 28% of Americans more than 5 hours to obtain a loan approval. However, with advances like our digital mortgage, the majority of our borrowers now receive a preliminary credit decision in less than 30 minutes.
This has changed the way originators structure their business. Historically, loan originators spent the majority of their time managing administrative tasks. These responsibilities have shifted to consumers to manage their own application process while originators focus on improving customer service and building relationships.
This is an interesting time for the industry as building new business will require a greater focus on customer service. Consumers are shaping business models and as a result, lenders must be willing to evolve with consumer preferences while remaining compliant with improving federal and state requirements.