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While just about everyone in the mortgage industry can agree on the hottest topic of 2015 (TRID), there is still widespread disagreement as to the depth of its impact, and the degree of difficulty in complying with it.
I talk to dozens of lenders from coast to coast every week, and find myself genuinely fascinated at the varying reactions to TRID. While most lenders remain unsure about the impact it will have on their business, this contingent also has yet to fully understand if or how their processes need to change to comply. The vocal detractors are the smallest but loudest group, refuting the viability of implementing TRID and expressing their disdain by spelling it backwards. These industry professionals generally assume that there will be a grace period or that the regulation will evaporate somehow.
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And then there are those who shrug it off as just another form. These lenders have already made the necessary adjustments to finish their loans and supply final disclosures to their borrowers at least three days prior to the scheduled closing. Some are even aiming for a five day lead time.
Why is there so much disparity in lenders’ reactions to TRID? It’s a clear signal that most lenders are not in control of their business processes. The new disclosure requirements are simply forcing lenders to become more efficient, but without process control, tightening up the loan lifecycle by three or more days seems impossible.
On a recent broadcast of “Lykken on Lending”, Alice Alvey, Senior Vice President of Indecomm Mortgage U at Indecomm Global Services said one department will remain unaffected by TRID: underwriting. “Their role isn’t impacted by this. You give them a clean file; they’ll be able to get it out. You give them a muddy file, and wait for your conditions.” She went on to point out that if you’re trying to peel five days off your production process, you should look for three of those days in the origination phase, one day in processing, and another day in closing.
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Alvey’s assessment clarifies the fact that the overall process will essentially remain the same. Many lenders simply cannot fathom a way to compress their processes to that extent. In talking to lenders who are ready for the August 1st deadline, the vast majority of them are using mortgage business intelligence (MBI) to track and shorten their processes.
MBI can map out and track a loan process working backwards from the estimated closing date to ensure key milestones remain on track, proactively sending email alerts to loan participants if a file is in danger of becoming noncompliant at any point in its lifecycle. MBI can also identify soft spots and friction points within subprocesses to illuminate where pinpointed training or coaching can further streamline production segments.
TRID is likely here to stay, but the good news is that if that there are a number of lenders who have already put themselves in a position to remain compliant, it proves that this challenge is not insurmountable.