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Don't TRID On Me!

So we are seeing all sets of positioning and posturing as to the effect of TRID on our industry. There are those who are saying it’s a non-event to those who have shutdown certain products or even taking new apps while they figure it out. Many of those who smugly said “no problem!” are finding out they weren’t doing it right when they go to deliver their loans.

At delivery is where you get the real log jam. Few lenders can agree what is TRID compliant. The confusion as to what the policy really says and the gnat’s ass definition of what “is” is brings the system to a grinding halt. THE CFPB can verbally tell us they will be kind and forgiving but as we feared the lending world is more worried about the buyers of the loans being unforgiving and the buyers are worried about the private and class action attorneys not being forgiving.

Thank God we aren’t in the spring market or in a refi boom! But wait aren’t either possibly around the corner? It is essential for doc provider/LOS systems and major correspondents to figure this out before either happens. But what about the customer experience, front end of the process post TRID?

TRID is delaying a minority of closings primarily through the title and attorney industry (mostly the sellers counsel) that were not ready for this change and fighting it every step of the way. They are often small offices with limited access to technology and qualified/trained staff. Also if they are consistent conveyancers they represent a large number of mortgage institutions who each have their own software to learn as well as their own interpretations of TRID. The lack of clarity in the regulations has added great pain throughout the industry causing issues with tech vendors who supports different companies, as mentioned title company confusion as to what is “standard”, and investors buying loans from the market with each investor using a different interpretation of the TRID guidelines, causing backups on warehouse and at correspondent departments. Add to that the typical borrower just not doing what they are told and delaying their documents or signatures, even though this new regulation is to protect them, and you have added stress.

TRID like all of the layers of regulation added post crisis end up somewhere in the cost of the loan, but not all can be passed on. The fixed costs have tripled since the crisis. Long term how do you lend to lower cost areas successfully and not lose money on each loan? How do you do the right thing with first time buyers, rural lending, and state bond programs when the MBA says it costs over $7000 to execute a loan? It’s a dilemma for the industry and clearly an unintended consequence of trying to protect buyers from bad lenders. In the end the buyer has in essence forced place insurance protection at a high cost and they don’t take advantage of all the information/disclosures provided and find it all a nuisance. The forms are much better and most of the new flow makes sense; but at what cost?

So in general we have been all able to absorb and shield the damage from the customer. But the grades of how we did from the compliance people and auditors are just coming in. Changing the entire process overnight in 50 states with many counterparties in the transaction and then expecting perfection on the all new forms is a fantasy. Hopefully smarter heads will prevail and realize the intent was achieved and the customer is better informed and protected (though still rushed and confused) and they should move on.