STRATMOR: TRID Is Boosting Customer Satisfaction

Posted by Patrick Barnard on March 29, 2016 1 Comment

One of the big questions mortgage lenders and others involved in the mortgage process have been asking for the past year is whether the Consumer Financial Protection Bureau’s (CFPB) new TILA-RESPA Integrated Disclosure (TRID) rules will result in any measurable improvement in customer satisfaction. The goal of the rule, after all, is to inform and empower consumers by giving them clearer information about the terms of the mortgage they’re considering and give them more time to compare what’s being offered with other deals.

According to recent data extracted from STRATMOR’s MortgageSAT Borrower Satisfaction Program, overall consumer satisfaction with the mortgage process has increased since TRID was implemented – but the increase is satisfaction mainly has to do with the fact that lenders are more frequently contacting borrowers during the post-application/pre-closing period, as a result of the CFPB’s new rule.

STRATMOR’s data also shows that although the average number of days to close a mortgage loan increased for a few months after TRID was first implemented, the average number of days to close has since decreased – at least as of February – back to a normal “pre-TRID” level.

The firm’s data shows that the percentage of borrowers being contacted by their lender prior to closing has increased from 85% to 91% since TRID was implemented. This increased contact – which was a key goal of TRID – is likely the cause of the increased borrower satisfaction. Currently, overall borrower satisfaction with the origination process stands at about 91%, a record high since MortgageSAT was launched in 2013.

The fact that TRID is having a positive impact on the consumer experience is good news for lenders because they have invested considerable time and money in technology, revamped processes and human resources in order to prepare for, and deal with, the new rule, which took effect on Oct. 3.

STRATMOR’s data also shows that TRID has boosted lenders’ back-office origination costs by an average of $210 per loan.

“Implementing TRID has obviously not been easy for lenders,” says Matthew Lind, senior partner and founder of STRATMOR, in a release. “It’s been costly, as well. On average, since October 2015, TRID has increased lender back-office fulfillment and post-closing costs by an average of $209 per loan, and lenders are estimating that only about 17 percent of those costs can be recovered through additional charges.”

Interestingly, STRATMOR’s research shows that independent lenders are generally well ahead of – and have had better overall experiences than – banks with regard to TRID implementation.

A survey conducted by the firm shows that about 87% of lenders now have the rule fully implemented; only 1% say their efforts are “way behind.” Independent lenders were generally ahead of banks, with TRID implementation fully accomplished at 72% of small and 80% of midsize independents, as compared with just 33% and 44%, respectively, for small and midsize banks.

In fact, banks seemed to have a harder time with implementation all around, with 31% characterizing their experience under TRID as either “difficult” or “terrible” versus only 16% of independents reporting similar results.

To access a copy of the report, click here.

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Comments

  1. My wife and I are Berkshire Hathaway agents here in Florida. I’m not sure who was polled in this survey, or whether it was statistically significant, or whether the survey was funded by the Consumer Financial Protection Bureau – but the output must surely be drug induced. We sold $10 million in real estate last year and we never heard a positive word from even a single customer about this new, government imposed process. Based on the key event triggering a better rating, the fact that banks are forced to contact borrowers more frequently, I’d have to say that this is just like every other federal government program we’ve seen of late. It adds time and cost to the key players and does very little to achieve it’s stated goal – protecting consumers from financial fraud. It would appear that the Federal Government has once again missed the mark by stepping on ants and letting elephants run free. When will the CFPB and the FBI get involved in the wave of escrow fund wire fraud theft going on in the country right now? Perhaps they will approach the “elephant sized” issue the same way they just did with Goldman Sachs and the Attorney General’s civil settlement. Although Goldman admitted they participated in the derivative scam, there is not a single criminal charge pending. And once again, the same tax payer who lost money in the market, or lost a home, or ended up paying higher taxes to bail out big banks, or all the above, that American consumer is left holding the bag.

    Time for some real change in this country, and hope is not a strategy!

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