Magazine article Mortgage Banking

TRID and Its Effect on Appraisal Compliance

Magazine article Mortgage Banking

TRID and Its Effect on Appraisal Compliance

Article excerpt

FOLLOWING A FLOOD OF COMMENTS from the appraisal industry, the Consumer Financial Protection Bureau (CFPB) chose not to address their concerns when finalizing the Oct. 3, 2015, effective date of the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure rule (TRID).

In response to the impending deadline, S. 1711--a bipartisan companion bill to H.R. 2213--has been introduced, which if passed, would provide a hold-harmless period through the end of 2015.

This bill was recently supported by 20 trade associations, including the National Association of Realtors[R] (NAR), Appraisal Institute, Appraisal Firm Coalition, Mortgage Bankers Association (MBA) and American Land Title Association (ALTA), to name a few.

The reason this broad-based coalition is pushing for the hold-harmless period is the confusion that exists around how to implement these sweeping changes.

As the modification in process is implemented by the industry across the board, possible hurdles may arise that will require guidance from the bureau. There is already enough concern about implementation of TRID and possible process delays that stakeholders should not also have to fear enforcement actions while trying to maintain compliance in uncharted waters.

Appraisal is the key in unlocking loan delays.

When Oct. 3, 2015, strikes, appraisal fees can't be changed after the Loan Estimate is issued to the consumer--which is required within three days of application. Under the new rule, appraisal fees are included in the CFPB zero-tolerance section, which means only a change of circumstance will allow a change in fee.

The appraiser is an unbiased professional in the mortgage transaction, which is good for the consumer and lender. While borrowers can't shop for appraisal services in a mortgage transaction, the cost for an appraisal varies with the complexity of the property involved and may change after the original fee estimate at loan application. This is commonplace and standard in the industry.

Mortgage lenders and their appraisal management companies are required to engage the most qualified appraiser on each transaction. During the vetting process, an appraisal fee is negotiated--depending on the complexity of a specific property. …

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