A Broker in Cali, that I have in my network asks me today;
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 now.
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 isn’t signed now and it’s easy for brokers to “switch” lenders will change. You will now need to “create” a new GFE 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). **re-post notes. This is why the “Broker is bouncing back”. The new disclosures level the playing field and Bank and Broker disclosures in the initial LE all look the same. More and more rules are coming that will make more “mini-correspondents” have more reserves and mandate licensing etc if they “lend”. Even more compliance laws to roll out in the next two years is what I see. Why being a “wholesale Broker” is the way to go. More new business starting daily.
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 see “more” upfront fees on LE than we do on the GFE now a days. The shopper will have a handle on Brokers that go skinny in the fees. 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, is changing 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. **re-post notes; This is why companies are hesitant to send out CD’s in advance of CTC. Continue to read 3.
3. The act that I preach now to all my network 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. SO, that means no last minute changes. 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. 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.
There are a few other changes Broker’s should know about, read about the full changes don’t go uneducated on how these changes will affect you. Happy Originations.
**Re-post notes; You still seeing the affect of TRID or are you closing loans fast again? If not call me I can help.