The deadline for implementing the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) deadline has come and gone. And as one might expect, TRID was a hot topic at the recent MBA Annual conference in San Diego. In particular, there was much discussion about the impact that implementing TRID had on the industry. The Mortgage Bankers Association reported that for the week following the implementation of the (now called) Know Before You Owe (KBYO) disclosures, mortgage applications fell by 27.6 percent. The association directly attributed the decline to KBYO implementation, saying "Application volume plummeted last week in the wake of the implementation of the new TILA-RESPA integrated disclosures, which caused lenders to significantly revamp their business processes, and as a result dramatically slowed the pace of activity.” But after extensive discussions with customers and other lenders at the MBA conference, we're wondering if there isn't an alternate, more nuanced explanation.
The youngest of homebuyers are overtaking the housing market and bringing with them an entirely new set of expectations for the mortgage industry. Millennials, those homebuyers under the age of 34, are the future of the housing market, and they have already arrived. According to the National Association of Realtors’ Home Buyer and Seller Generational Trends Study, millennials now surpass all other generations, representing 32 percent of all homebuyers. Recognizing that this generation brings its own unique financial profile, life experiences, buying preferences and communication resources, the mortgage industry must rethink the old way of doing business.
During June and July of 2015, there has been an increase in the critical vulnerabilities found with Adobe “Shockwave” Flash Player. Adobe Flash Player is used to stream and view video, audio and multimedia including Rich Internet Applications (RIA) on a computer. These vulnerabilities have caused a movement in the industry to stop using Adobe Flash Player because of ongoing security concerns with any website, and subsequently, supporting web browsers. Due to the steps taken by the industry on the use of Flash with several browser companies and the steps that eLynx has taken to address it within the organization, we believe our exposure to the vulnerabilities is extremely LOW.
Topics: Information Security
As we noted last month, the mortgage industry has been lobbying hard for a formal grace period so that lenders can work on getting all the TILA-RESPA Integrated Disclosures (TRID) transition bumps worked out without the pressure of fines and penalties. Yesterday, when the CFPB opted to delay the effective date for TILA-RESPA implementation to October 3, they created for themselves an opening to provide a mini grace period of sorts. Here's how.
On June 3, 2015, the Consumer Financial Protection Bureau (CFPB) finally acted in response to a month of heavy lobbying from the housing industry. Countless letters from members of Congress and two proposed bills later, the CFPB offered an informal grace period of sorts on TRID enforcement. Following a meeting with the Mortgage Bankers Association, the CFPB sent a letter to nearly every member of Congress and published a factsheet on resetting three-day closing review periods to explain the agency’s decision and approach.
After more than three years of model disclosures, consumer testing, Small Business Regulatory Enforcement Fairness Act (SBREFA) panels, comment periods and stakeholder meetings, the deadline for the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) is nearly upon us. All of this anticipation has brought the mortgage industry to a fever pitch with calls for delays, regulatory grace periods, and even technical corrections. Banks, mortgage lenders and service providers are pulling out all the stops to prolong the path to implementation. It is not clear, however, that any of these efforts will yield meaningful results.
Starting August 1st, lenders will have to abide by new restrictions on how much variation is allowed between the Loan Estimate and the Closing Disclosure. Knowing what can change and by how much is one of the challenges facing lenders and settlement service providers (SSP) as they gear up for the new Integrated Disclosures. We’ve all probably read through or heard about the new tolerances but for many in the industry, unless they are engaged in ramping up for TRID, the details aren’t always crystal clear.
Last week, I attended the Miami session of the MBA-ALTA sponsored TILA-RESPA Integrated Disclosures (TRID) forum. Being the second of five such forums, there are still three remaining to attend if you want to catch one of these full-day sessions. I highly recommend these for anyone wanting to understand the detailed issues currently being addressed as the mortgage industry prepares for August 1. As Brian Webster of the CFPB noted in his forum remarks, the challenge with TRID now is all operational — how to handle the numerous implementation questions that arise when trying to put new TRID-based process into place. And there certainly are a lot of issues. The session was jam packed with little time to rest in between each topic. Here are five key points I took away from Miami.
One of the areas most affected by TILA-RESPA Integrated Disclosures (TRID) is the coordination of workflow between lender (creditor) and settlement service provider (agent) in the production of the Closing Disclosure (CD), the new form that replaces the HUD1 for loans initiated as of August 1 of this year. While both parties have always interacted to create today’s HUD1, the dynamic of that interaction is going to shift with lenders taking over ultimate responsibility for the generation and sending of the CD three days in advance (in most cases, and everyone that we have seen so far). Settlement service providers will not be producing the CD and instead will be asked to by lenders to provide critical information that only they have. Therefore, lenders should communicate as soon as possible with their settlement service provider community on how they plan to produce the CD, what information they will require, and how they expect this interaction to function in the new TRID world.