Magazine article Mortgage Banking

TRID Puts Focus on Tech Firms

Magazine article Mortgage Banking

TRID Puts Focus on Tech Firms

Article excerpt

"IT'S NOT ENTIRELY SURPRISING," observes eLynx President and Chief Executive Officer (CEO) Sharon Matthews, that the Consumer Financial Protection Bureau (CFPB) became concerned when some mortgage technology companies weren't ready to implement the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID) rule once it debuted last Oct. 3.

CFPB Director Richard Cordray stated at the 2015 Mortgage Bankers Association (MBA) Annual Convention that a number of vendors "performed poorly." Cordray added a warning that tech firms can't ignore: "It may well be that all of the financial regulators, including the Consumer [Financial Protection] Bureau, need to devote greater attention to the unsatisfactory performance of these vendors."

Resolving the details of getting systems used by different professionals to work together is causing the industry "a considerable amount of difficulty," notes Matthews. Data issues--such as when a lender and settlement agent round decimal numbers differently--are creating misunderstandings and delays in TRID adoption, Matthews comments. She expects transactions will start closing faster once the industry has navigated this "rough air."

Working with lenders whose loan origination system (LOS) isn't TRID-ready adds "one more level of complexity" to eLynx's current challenges, contends Matthews.

The ability to handle mortgage originations electronically "starts with the LOS," explains Alec Cheung, eLynx's vice president of product management and marketing. He says eLynx works with all LOSes. "We're like Switzerland," adds Cheung.

Manage data--not docs

eLynx focuses on producing what Matthews calls "data-validated mortgages." At eLynx, that means "trackable, traceable data" embedded in mortgage documents, she notes. Details on where that information came from and when it was placed in the loan file stay with documents and are accessible at any time, says Matthews.

eLynx espouses managing mortgage data rather than documents. A key to this strategy is using electronic commerce standards developed by the Mortgage Industry Standards Maintenance Organization (MISMO[R]).

MISMO version 3.3 was produced to move data from a lender's LOS and a title agent's closing software into TRID-compliant disclosures. Yet not all LOSes are employing those standards, observes Matthews--and that makes producing TRID disclosures harder.

Some lenders also are relying on "expensive, high-risk and painful" manual processes, Matthews adds. Lenders then must hire staff to "stare and compare" documents to make sure all the signatures in a loan file are in the right spots, she explains.

Numbers entered on documents also need to be checked for accuracy in every place they appear. However, eLynx can take uploaded paper documents from lenders, then scan and convert them into MISMO 3.3 before sending that data back to the lender's system.

A common dataset allows information coming from different systems to be placed into the appropriate field in a TRID disclosure. Data integrity is enhanced by MISMO 3.3's ability to attach a layer of background information to readable text on disclosure forms.

Audit trails then can be established to show where data originated, and digital signatures may be recorded and dated. Electronic processing is capable of ensuring documents are complete and compliant.

"The implications of where we're going are really enormous and really positive," Matthews says. …

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