BLOG VIEW: For nearly two years, mortgage industry professionals have been moving mountains to become compliant with the new TILA-RESPA Integrated Disclosure (TRID) rule, effective Oct. 3, lest they suffer possible enforcement actions under the authority of the Consumer Financial Protection Bureau (CFPB).
TRID itself will bring much good to the industry, but its learning curve is steep and has proven challenging for lending professionals.
Additionally, others with a role in the lending process, such as mortgage insurance and technology providers, have proactively taken steps to ensure partner readiness so that all parts of the new lending process are accounted for and fully operational at the prescribed time.
With so much effort, energy and resources spent on attaining TRID readiness during this transition period, has enough consideration been given to how to evolve technology practices?
Speed And Accuracy
Integrations have become an oxygen-type necessity in most areas of our daily lives, both at home and at work. For the latter, the speed at which we embrace technology is entirely dependent on the industry in which we work. In 2014, Genworth Mortgage Insurance surveyed over 300 mortgage industry executives at the Mortgage Bankers Association's Annual Convention and Expo, uncovering that 52% of respondents viewed the housing industry as either falling below technological standards or being completely outdated.Â
So, where are we 12 months later? With lenders so heavily focused on the regulatory environment, and on TRID specifically, it's safe to say that despite some forward progress, the housing industry still remains behind the curve in adopting technology changes or upgrades.
Why is that? If anything, in a world of new disclosures, one that replaces the good faith estimate and initial truth-in-lending disclosure – called the loan estimate – and one that replaces the current HUD-1 settlement statement and final truth-in-lending disclosure – called the closing disclosure – speed and accuracy become much more critical. The loan estimate must be issued within three business days after the application, and the closing disclosure must be received by the consumer three business days prior to loan closing to rule out the possibility of lengthier re-disclosures.
To accommodate all of these changes, the process must become faster and more efficient.
The Power To Automate
The new environment calls for lenders to streamline the origination process by creating more automation, thereby reducing the potential for human error. Having the power to seamlessly retrieve product and rate information and to update the proper disclosures with a minimal number of key strokes enhances the lender's ability to quote, process, underwrite and eventually close a loan with the utmost accuracy and speed.
The question is, will lenders take advantage of technology solutions that offer this level of automation? Are they aware of whether their current systems already offer these capabilities? Are these technical solutions even available?
Greater Need For Education And Advancement
Though technology providers and customers alike have been racing to adapt to the new regulations, much work remains for both parties. Beyond meeting the immediate compliance requirements posed, the industry must now focus on adopting and implementing the additional technology advancements that will streamline the entire process.
Fundamental enhancements, such as the ability to deliver loan documentation from within an interface to vendor and mortgage insurance partners or more efficiently send and receive data, now become a key focus. Beyond simply implementing these new changes comes the challenge of training the end users on how to utilize these new features to improve productivity and simplify the process as a whole. Users must be proactive about adopting these technology offerings to best serve their needs. As the technology environment evolves, remaining in one's comfort zone is only a short-term solution.Â Â Â
These technology advancements won't impact industry participants alone. After TRID takes effect, consumers will be encouraged to receive their disclosures electronically to save the additional waiting period for the disclosures to arrive to them. This allows the lender to easily prove compliance on the timing of the disclosures for both delivery and receipt. The pressure of having the final closing disclosure prepared in six to seven business days will also be eliminated.
As it turns out, borrowers encourage this advancement, as well. According to the results of a CFPB survey published in August, borrowers who received their disclosures electronically felt more empowered and had more control in the process. The CFPB has identified the practice of ‘e-disclosing’ to be a best practice for the mortgage industry. The three-day waiting period will benefit all borrowers in understanding the entire cost of the transaction and any variations from their initial estimate – regardless of how it's received.
Although technology has netted huge improvements in the past year, the loan origination and approval process is still very manual and sometimes paper-intensive. With so many avenues and opportunities for improvement ahead, the question isn't whether there is anything else to do, but rather, what the next focus should be.
So, what is your mortgage technology capable of? Does your loan origination system allow for delegated and non-delegated transactions with your mortgage insurance provider? Does it give access to rate quotes? How do you evaluate your capacity for change management, training and the adoption of new technology?
Implementing TRID is in the best interest of our industry. But the broader issue is how the industry will become more receptive to change, particularly when regulation and technology are intertwined. As the shift to online disclosures and applications grows, lenders, insurers, technology vendors and borrowers will have to remain nimble to stay ahead of the curve.
The point is that with TRID just a few days away and the prep to achieve readiness almost behind you, is it time to take a second look at your technology practices? You just might be working harder than you have to.
John Clifford is senior vice president of commercial operations for Genworth's U.S. Mortgage Insurance division, where he is responsible for products, account development, marketing and public relations, customer experience, commercial analytics, sales support, and customer training.
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