The Consumer Financial Protection Bureau’s (CFPB) new TILA-RESPA Integrated Disclosure (TRID) rules mean that servicers must take extra care over the next several months when onboarding new loans, Kevin Brungardt, chairman and CEO of RoundPoint Mortgage Servicing Corp., warns in a statement.
A recent report from Moody’s shows that more than 90% of the mortgages originated since the TRID rules went into effect on Oct. 3 contain violations, however, many of the errors are only technical in nature. Moody’s findings are based on third-party reviews of about 300 loans from random, unidentified lenders.
According to Moody’s report, some of the new forms included wrong spelling conventions for counterparties’ names, such as not including a hyphen in someone’s last name.
Though such errors might seem immaterial in nature, they could be enough to get the attention of regulators. Worse, they could potentially result in lawsuits and mortgage buybacks should borrowers go into default.
As Brungardt points out, lenders are still adjusting to TRID, and many of the errors seen in loan files today will, no doubt, be corrected in the near future.
“In our discussions with the many originators we serve, it was clear to them from the beginning that this would be an adjustment period when many minor, procedural problems might occur,” Brungardt says in his statement. “For the most part, we’re hearing that originators are compliant with the vast majority of the CFPB’s TRID-related rule changes. Furthermore, we’re able to help them keep customer satisfaction high when we board their new loans to our servicing platform. In time, these changes, like all major changes the industry has worked through over the years, will be fully integrated into the operations of all lenders.”
But, until the bugs are all worked out of TRID, it’s vitally important that the loan onboarding process go smoothly, Brungardt warns.
“The loan boarding process has always been important,” Brungardt says. “Now, with TRID, it’s even more so because the regulator believes that this rule change will, in itself, create satisfied borrowers. Only good originators and servicers can do that. A smooth handoff after the loan closes is the surest way to hedge against the risk of customer dissatisfaction that can lead to negative reviews and regulator scrutiny.”