So what was the top pain point for mortgage originators, in terms of regulatory compliance, for 2018?
According to a survey from MetaSource, the Closing Disclosure that is required to be furnished to borrowers under the Consumer Financial Protection Bureau’s “Know Before You Owe” or TILA-RESPA Integrated Disclosures (TRID) rule continued to be a top challenge.
The results show that the same three closing disclosure issues that gave lenders the most trouble in 2017 continued to be top problems in 2018: Tolerance violation; calculating cash-to-close; and timing violations.
This is surprising for two reasons: First, mortgage lenders have had ample time to smooth out the process of delivering accurate disclosures to borrowers and, second, mortgage volume is down compared with 2016, when the TRID rule took effect.
“Despite everyone’s understanding of TRID and efforts to correct for it, we’re not seeing the decrease in findings we should be seeing,” says Brady Meadows, senior director of mortgage services for MetaSource, in a statement. “It appears the rush to execute volume is superseding effective document and process management.”
As Meadows explains, the problems that are occurring with TRID are not due to lenders misunderstanding the rule. Rather, they are due to a lack of proper automation and coordination between systems.
“There are often excessive versions of loan estimates and closing disclosures in mortgage files,” he says. “This creates errors and difficulty determining the sequence of the issued documents and which is the most recent.”
A better practice, Meadows says, is to create a clear record of the sequence of the documents issued and to not issue more disclosures than are needed.
The goal, he said, is to create an easy-to-follow record of how one arrived at the final version.
“Think about a regulatory agency digging through your files and what would be the clearest way to present how these documents were issued,” he says.
In terms of non-regulatory QC issues in 2018, incorrect income calculation, missing or defective employment verification and insufficient assets to close were the highest-ranked.
The results indicate documentation problems in a wide array of areas that also included missing or defective intent to proceed and settlement service provider lists.