Home / Commentary / Complexity of TRID Brought Many Unforeseen Issues in the 11th Hour
Print This Post Print This Post

Complexity of TRID Brought Many Unforeseen Issues in the 11th Hour

Jonathan Kunkle

Jonathan Kunkle

Jonathan Kunkle is president of GuardianDocs, the document services division of Denver-based LenderLive Network Inc., an end-to-end residential mortgage services provider supporting financial institutions of all sizes and other related entities with origination, servicing and loan purchase operations. Kunkle has more than 23 years of experience in senior management roles, with 13 years in the mortgage industry. He joined LenderLive as vice president of sales in 2008 when the company purchased Guardian Mortgage Documents. There, he was responsible for all of the company’s sales initiatives. Kunkle recently spoke with DS News about the implementation of TRID with his company, both what has gone well and the challenges, and what the future holds for TRID compliance.

Has the TRID rollout been smooth overall for LenderLive or has it been a challenge?

There are many components of the TRID implementation that went well. For example, when the MBA reported a drop in applications during the first few weeks of October, as TRID took effect, LenderLive’s fulfillment clients actually increased their application flow by more than 10 percent.

Having said that, there have been some unforeseen issues for us, and the rest of the industry, in the 11th hour. These weren’t a result of procrastination, but rather the complexity of the rule, the challenges in testing every possible scenario, and working with all of our partners to ensure their success. I think we saw it all in that 11th hour and, despite what Richard Cordray proclaimed, it was a struggle to be compliant day one for all lenders and the service providers assisting them.

What are some of the major TRID compliance issues you have experienced or heard about from clients?.

Many challenges we saw were related to calculations within the Loan Estimate/Closing Disclosure (LE/CD). Even with an exhaustive testing suite, we still had questions as TRID was going live on unique loan scenarios that challenged our calculation engine. As an example, a seldom used but very complicated calculation is the application of a borrower (or third-party) buy down and how that buy down impacts the TOP, TIP, and worst case payment adjustments and how each is disclosed.

On the client side, we’ve heard of a few challenges around fees changing within the 10% tolerance and how to alert the borrower of that without issuing a new LE. Moreover, as these changes aggregate throughout the course of the origination process, our clients have experienced a new challenge in maintaining a source of truth, passing their compliance audits, and ensuring that the last LE has encapsulated all of the accurate costs.

Cordray’s recent response to the Mortgage Bankers Association’s David Stevens indicating that a ‘good faith effort” to comply with TRID will lead to “corrective and diagnostic, rather than punitive” action by the CFPB is very good news for the industry trying to address these compliance issues. I think the CFPB has recognized that, in order to comply with the Know Before You Owe legislation, it takes an orchestrated effort between people, including the borrower, the seller, the lender, and the settlement company, as well as the systems, including the doc prep tools and loan origination system.

Do you see TRID compliance becoming less or more of an issue in 2016, and why?

With practice, everything becomes more second nature. I also think with TRID we’ll see more loan origination systems adopt the MISMO 3.3 standard, which will help eliminate data entry within a doc provider’s website. Today, this practice of re-keying figures into yet another application just to generate docs is ripe with TRID-related compliance concerns. With MISMO 3.3, the LOS can remain the source of truth, as all of the data will reside therein and not in another system.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
x

Check Also

Federal Reserve Holds Rates Steady Moving Into the New Year

The Federal Reserve’s Federal Open Market Committee again chose that no action is better than changing rates as the economy begins to stabilize.