On Aug. 1, lenders will resume responsibility for the actions of all parties at the closing table — but that doesn’t mean lenders will prepare consumer disclosures and loan documents in a vacuum.
That’s what a panel of executives from some of the nation’s largest banks told members of the American Land Title Association last month when discussing the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) rule, which will take effect Aug. 1.
At ALTA’s Business Strategies Conference, held March 18-20 in Philadelphia, the lender executives said after digesting the CFPB’s 1,888-page TRID rule and all of its accompanying regulations, they could not get comfortable with delegating certain responsibilities to title and settlement agents.
Released by the CFPB in November 2013 as part of its “Know Before You Owe” initiative, TRID consolidates four existing disclosures currently required by TILA and RESPA into two forms: a Closing Disclosure that replaces the HUD-1 that must be provided to the consumer at least three business days prior to consummation of the transaction; a Loan Estimate that replaces the Good Faith Estimate designed by HUD under RESPA; and the “early” Truth in Lending disclosure designed by the Fed under TILA, which must be delivered or placed in the mail no later than three business days after receiving the consumer’s application.
TRID requires that the Closing Disclosure be provided by either the creditor or a settlement agent. However, as with the Loan Estimate, the creditor retains ultimate responsibility and liability for ensuring that the disclosure is provided in accordance with the rule.
“We just felt that the CFPB made it clear that the liability, accountability and accuracy of the document sits with the lender,” said Dottie Hackett-Cole, vice president of processing and training at the Trident Group, a full-service mortgage banker and one of the largest Realtor-affiliated mortgage companies in the country. “From a risk perspective, we just felt that we needed to own that process.”
Penny Reed, vice president of settlement services at Wells Fargo Home Mortgage in Minneapolis, said lenders will still rely heavily on the local expertise and knowledge of title and settlement agents to make sure that the information on the new forms is correct, but compliance with the new regulations will require a shift in the timeline these responsibilities have been carried out for the last three decades.
“We understand that similarly to how the HUD-1 prepared today is a collaboration between the lender and the settlement agent, with the final version being produced by the settlement agent, this would be the reverse — a collaboration on all the numbers between the lender and the settlement agent, with the final version being produced by the lender,” Reed said.
Bob Kelly, senior vice president at Bank of America in Charlotte, North Carolina, encouraged the title and settlement agents in attendance to get engaged in these collaborative efforts now. Bank of America will be using a closing agent web portal to track the entire closing process, and its title and settlement partners should be registered and trained on how to use it well before Aug. 1, he said.
Kelly also encouraged title and settlement agents to provide feedback to their lender partners on all of the expected changes to processes and systems.
“We’re trying to get to where we make your lives easier,” Kelly said. “We know we’re going to get you engaged in the closing process earlier. We’ve got to get the Closing Disclosure out and everything wrapped up seven days before the closing date. We can’t wait for transmission of data back and forth 24 hours in advance. Getting your processes prepared to handle a Closing Disclosure that is likely to hit the mail six to seven days ahead of the closing date, that is going to cause all of us to have to redo some of our workflow processes and some of the things we have become accustomed to doing.”
Ultimately, what lenders don’t want to happen is “closing dates just being moved out,” Kelly said. Some have said the CFPB’s regulations will stretch the closing process to an average of 30 to 45 days or more. To shorten closing timelines but comply with all of the CFPB’s requirements will take dedication from all parties, Kelly said.
“We want to figure out how to change the process so we can all meet the same date we meet today. It’s a big challenge to figure out the right way to do that,” he said.