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Imagine this: One of your clients has recently started house hunting. They are looking for mortgage lenders. Understandably, they have a multitude of questions and some reservations. They’re also keen to fully explore different mortgage options and partner with a lender who will best serve their interests.
Unfortunately, we’ve all heard of unscrupulous lenders tricking unsuspecting home buyers. For this reason, it can be even more challenging for you as a mortgage loan lender to convince loan applicants. What’s the solution you ask?
The Consumer Financial Protection Bureau (CFPB) is a Federal Reserve unit that protects buyers from malpractices by financial institutions. It mandates fair, transparent and competitive services for consumers. TRID compliance, also called the “Know Before You Owe” rule is a series of guidelines enforced by the CFPB.
TRID: TILA-RESPA Integrated Disclosure
TILA: Truth in Landing Act
RESPA: Real Estate Settlement Procedures Act
TRID mortgage compliance covers all the information that you, as a lender, should provide to homebuyers, to help them make informed decisions. It substitutes the Good Faith Estimate and HUD-1 regulations with:
Loan Estimate Disclosure: Includes extensive details of the proposed loan amount.
Closing Amount Disclosure: Includes extensive details of particulars such as itemized costs to avoid variations from loan estimates.
TRID also places special emphasis on timing, accuracy and completeness of both these disclosures.
Consumers enjoy TRID compliance benefits by making sure they get what they are promised at the beginning of the mortgage process, whether it is a low interest rate or lending fees. It is designed to prevent the ‘bait and switch’ tactics of mortgage lenders.
Hopefully, you now understand the purpose of TRID mortgage compliance. However, it is an addition to the several existing sets of regulations. Let’s find out how TRID compliance benefits mortgage lenders.
The Benefits of TRID Compliance for Mortgage Lenders
TRID mortgage compliance became an enforceable law more than 6 years ago to protect the interests of individuals seeking a mortgage loan. However, over this course, everyone including homebuyers and mortgage lenders have benefited.
#1. Improve Communication with Borrowers
TRID allows better communication between you and your loan applicants. Before the law came into effect, it was the closing agent’s responsibility to share the Closing Disclosure with no measures in place to verify its completeness and accuracy. When you practice TRID compliance, it becomes your responsibility to share the closing disclosure, giving you more room to communicate with the borrower throughout the lending process.
#2. Improve customer relations
TRID gives you the chance to improve customer relationships as you get more time to collaborate and interact with your customers. Since borrowers are unaware of the intricacies of mortgage lending, you must communicate openly and explain the process to build credibility.
#3. Reduce time spent resolving queries
Your customers will have fewer queries given the exposure to the real-estate closing deal. As you collaborate with them at each stage of the lending process, you will have to spend less time on explanations and errors related to cost variations and dead-end conversations regarding the closing process.
#4. Streamline mortgage closing process
As a mortgage lender, you can’t neglect the value of time. TRID eliminates the need to explain to customers the event sequence in the closing process, from scratch. That’s why the process is quicker and more streamlined with minimal interruptions. Quicker loan closures will also make your customers happy.
TRID makes the loan process quick, reliable and safe for customers and mortgage lenders. However, there are a few rules that lenders must follow.
TRID Requirements for Lenders
Sticker Shock is the feeling of dismay homebuyers experience when lenders quote exorbitantly high closing prices when compared to the loan estimate disclosure. TRID helps you make sure your clients don’t experience Sticker Shock.
Here are the set of requirements you need to follow as a part of TRID regulations:
- You can’t charge your clients any fee for submitting a loan application or requesting loan estimates
- You should share loan estimate amounts within three days of receiving a request
- You should share the closing disclosure three days before signing the loan agreement
- You should provide the homebuyer contact details of the loan officer
- You should maintain files of estimates and disclosures for at least three years
Partner with a mortgage process outsourcing provider to speedup and streamline processes associated with enforcing TRID mortgage compliance.
Aritas Mortgage Solutions has extensive experience in offering customized, digital solutions that will help you effectively meet business demands..
Get in touch for a TRID compliance guide that can help you get started.
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