Critical loan defects spike – thanks to TRID

by Ryan Smith06 Sep 2016
Mortgage defects are on the rise – and TRID is the cause.

That’s the conclusion reached in a new report by ACES Risk Management (ARMCO). The company’s Q1 2016 ARMCO Mortgage QC Trends report found that a decline in mortgage defects that started in 2015 has reversed itself.

“Through 2015, the industry experienced a significant decrease in overall critical defect rates,” ARMCO COO Phil McCall said. “However, this trend began to reverse itself in Q4 2015, and the defect rate rose once again in Q1 2016. Struggles with TRID compliance can be directly associated with this recent rise in defects.”

According to the report, the industry’s critical defect rate had plummeted after the second quarter of 2015, dropping to 0.77% by Q3 of 2015. But with TRID implementation that trend reversed, and by Q1 of 2016, the critical defect rate had spiked to 1.92% – higher than it had been in Q2 of 2015, before the drop.

And TRID seems to be the key behind the increase, according to the report. In 2015, according to ARMCO, the “Legal/Regulatory/Compliance” category accounted for just under 26% of all loan defects.
“As the TILA-RESPA Integrated Disclosure (TRID) requirements went into effect in October 2015, the dramatic increase in reported defects for the Legal/Regulatory/ Compliance category can be directly associated with lenders struggling with the implementation, interpretation and compliance of the new TRID regulations and, as of Q1 2016, accounted for 50% of reported defects,” the report stated.  


  • by Michele | 9/6/2016 7:41:35 PM

    This isn't surprising. TRID has succeeded in complicating the disclosures, driven up costs and further confused the consumer. This was not a benefit to the consumer.

  • by Griff | 9/7/2016 11:16:17 AM

    Michele's reply is succinct and correct. I just closed a mortgage after torturing the buyer for 7 weeks over appraisal issues (caused by amc's using the cheapest appraisers in the market). This buyer would have loved to not spend an additional 4 days due to TRID on motel, eating out, etc. costs. Who the He

  • by Griff | 9/7/2016 11:17:34 AM

    To finish, Who the HECK is TRID helping?


Is TILA-RESPA a good or bad thing long term?