How does TRID really affect me and what do I really need to know?
My answer is 3 parts of importance for you to know on how it changes the way the Mortgage Broker does business. PS I SAID THIS BEFORE TRID EVEN ROLLED OUT>
Now LO’s need to IMPLEMENT these best practices.
1. The way Broker’s can switch lenders in doing business now changes. The thing to know is the GFE and the TIL are combined. So the fact the GFE wasn’t signed made it easy for brokers to “switch” lenders. Now some companies are doing the disclosures, and some require the Broker too. MOTIVE LENDING GIVES YOU THE OPTION. You will now need to “create” a new LE if you are switching lenders assuming comp plans are different or the fee’s are different. Then the borrower would need to sign that new LE (Loan Estimate). OR you can submit to MOTIVE LENDING and have us DISCLOSE for you.
THE SKINNY PACKAGE IS BACK! Best Practice tip, even if the lender allows you to generate disclosures on their site, it’s always a best practice to disclose your own version out of your LOS. (caylx, byte, encompass, whatever you use) CFPB won’t ever come after you for over disclosing.
2. The Tolerance items on the GFE as it is now are changing. This could be a big movement in the industry. And we could/SHOULD see “more” upfront fees on LE than we do on the GFE in the past. Here’s why… The shopper will have a handle on Brokers that go skinny in the fees. DON’T BE THAT GUY. The average cost of mortgages just went up on initial disclosures, you should be displaying/implementing this more in your fee worksheets and LE’s upfront. You know how the transfer taxes and owners title are a “ZERO Tolerance” item…. well guess what, that section of the “LE” or new GFE if you will, has changed to include more items. Pretty much all the items in box 3 right now. What that entails is the Credit Report fees, the Appraisal fees, Tax Service fees, Flood Cert fees. So, better make a new BEST PRACTICE as a Loan Originator in my opinion. At the beginning you should disclose the cost of an appraisal and 1004D upfront at least. Better disclose the credit report fee and at least two credit sups upfront. Hope to see Flood cert’s and Tax Service fees more common on the new LE as well. These would be mandatory to disclose in my mortgage company if I owned one. Because if your fee’s end up 1 dollar more we all know that the 1 dollar becomes a Broker cure on the difference and shorts your income.
Grab at an OLD 2010 GFE right now as you read this. Look at the 3rd page of the GFE at the top where the chart is, you will see this;
This is and has been the “Bible” of rules of what can change and what can NOT change and what has a 10% tolerance allowed. This HAS CHANGED and some Brokers don’t realize that they should change their disclosure habits as a result..
THREE major changes in Zero tolerance items that CAN NOT INCREASE (red) is changing to include some new items. The zero tolerance category now includes;
1. Affiliate Charges – Zero Tolerance must disclose fees.
2. Fee’s paid to unaffiliated third party providers that consumer can NOT shop for/ FLOOD CERTS/ 1004 D/APPRAISAL/TAX CERTS = IMPLEMENT THIS, PUT ON LE
Then there is another change in the GREEN area of charges that are ALLOWED to change.
3. Charges paid for third party services not required by creditor, even if an affiliate
What this means is any third party service that is the clients optional cost to incur on any loan. Such as an inspection would fit in here. This means an Inspection is about the only thing that can be added to fees throughout a loan. (assuming as a non required creditor fee)
Know your “Bible” of fees and how much and what can change, what can NOT change, and what has a 10% tolerance.
The act that I have preached to all my network prior to TRID about “creating a HUD1” out of calyx or encompass after verifying fee’s is going to be a big deal. At the end of the process under TRID there is a new disclosure called the CD (Closing Disclosure) that goes out and you have to wait 3 days from acknowledgement to get docs. Hopefully everyone knows this by now. SO, that means no last minute changes. IMPLEMENT THIS. About the time the loan is CTC’d Broker’s should be verifying fees from Title/Escrow and then having processors verify all those fees and structure with a HUD1 you create out of Calyx/Encompass/Byte etc. Or CD to be exact, or even an old fashion fee worksheet. I don’t care, as an AE the biggest issue I see is that LO’s and Processors need to balance their file prior to closing more accurately than ever before. Right about the time the loan is CTC’d. Again the point is changes will delay loans and burn locks. So it is important for all loan originators to adopt a new process that verifies structure and fees on a loan prior to closing. Like a week before. As the last conditions are sent in for example.
Happy Application Taking – JUICEMAN BEST PRACTICE