Magazine article Mortgage Banking

Ready or Not: Here TRID Comes

Magazine article Mortgage Banking

Ready or Not: Here TRID Comes

Article excerpt

1, 2, 3, ... 8, 9, 10, READY OR NOT, AUG. 1, 2015--a date that has been circled on our calendars for months--is right around the corner. Are you and your company ready for the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID)[paragraph] By understanding and practicing the following four guidelines, you and your company should be all set for the deadline. (Note: This column was written before the announcement of a proposed extension of the effective date.)

Guideline No. 1: Compliance

By now either you or hopefully your compliance team has read all 1,888 pages of the TRID rule and absorbed its ins and outs. You have spent countless hours studying the operational aspects of the rule, including the new timing requirements and the new variance (tolerance) requirements.

You then studied the forms themselves; the Loan Estimate, which must be provided to the consumer no later than three business days after receiving an application from the consumer; and the Closing Disclosure (collectively, the disclosures), which must be provided to the consumer at least three business days before consummation.

After feeling pretty good about your accomplishments of making it through the rule, you sit down to begin implementing the disclosures, and you realize that the disclosures are more complex than you initially thought. You realize that you have different formatting, rounding and calculation rules to follow depending on the disclosure and where the information is to be populated on the disclosure.

You then realize that although it may appear logical to leave something blank, you cannot do that unless the rule specifically allows for it. You also realize that, depending on the product type, the disclosures may need to include additional information.

As you may already know, if you are the lender, you are ultimately responsible under TRID for the timing, completeness and accuracy of the disclosures. Initially, in terms of being ultimately responsible, you may be thinking about examinations by the Consumer Financial Protection Bureau (CFPB). However, you must also consider investor requirements. Fannie Mae and Freddie Mac may not purchase a loan if it is not in strict compliance with TRID.

At this point, you are thinking (or hopefully have thought already): What should I do? How am I going to tackle TRID? That brings us to guideline No. 2, technology/software.

Guideline No. 2: Technology/software

The key to meeting TRID requirements is having the proper technology/software solution in place.

Technology will help you, as the lender, in the following ways:

* Obtain the data that is to be populated into the Loan Estimate;

* Complete the Loan Estimate accurately;

* Deliver the Loan Estimate to the borrower in a timely manner; and

* Compare the Loan Estimate against the Closing Disclosure to make sure that the fees meet the tolerance requirements.

Have you upgraded to the Mortgage Industry Standards Maintenance Organization (MISMO[R]) 3.3 and Fannie Mae and Freddie Mac's Uniform Closing Dataset (UCD)? MISMO 3.3 and the UCD were designed for TRID and its dynamic disclosures configurations.

MISMO is a data governance and technology standards group that develops and maintains mortgage-related standards and specifications. Version 3.3 is a common dataset that is essentially a prerequisite for lenders to use the disclosures and to share the information about the disclosures with their industry partners. …

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