No Y2K drama here – TRID fears real

by Donald Horne27 Nov 2015
While the President and CEO of the Mortgage Bankers Association is dismissing concerns over TRID – likening them to the hysteria surrounding the Y2K bug leading up to 2000 – those in the industry are firing back that there is indeed a problem.

“We are just now starting to see the full effects of TRID in the way of waiting periods to close,” wrote one MPA reader Ashby. “The first part - the Loan Estimate - is the easy part. I actually like the mortgage estimate much better than the old GFE/TIL. The hard part occurs after you get your clear to close. That is when the frustration occurs.”

Another MPA reader, Ryan Taylor took aim at Diana Orlick, who used her Facebook page to share the concerns of industry professionals about TRID, and a CNBC article that stated those industry fears were overblown.

“Olick has her head in the sand,” wrote Taylor. “The business is not being destroyed, but there are more costs to the consumers and huge delays.”
Those delays are being caused by the lenders staff not fully understanding the rules, the attorneys not fully understanding the rules and title companies not fully understanding the rules.

“In New York, until TRID went into effect, you had most mortgages having last minute adjustments,” says Taylor. “Now they can't and getting final numbers from all parties and then getting them reviewed has been a disaster!”

The CNBC article in question states that new rules designed to give borrowers a better understanding of their home loans are apparently not causing the widespread disruptions in the housing market that some had predicted. Lenders and real estate agents alike had warned of potential delays that could even scuttle some sales, but so far they have not come to pass.

“I think it was a Y2K analogy where expectations of the worst happening just weren't there,” David Stevens, president and CEO of the Mortgage Bankers Association, told CNBC.

Among those who were raising the alarm of the adverse effect of TRID were Marc Israel, president and chief counsel for MiT national Land Services, who told MPA that TRID’s impact “will be significant on lenders, brokers and title insurers;” adding that “it will be much harder to close on a moment’s notice.”

David Hill, a loan originator with Independent Mortgage, told MPA that he was telling clients to try not to have multiple closings at the same time.
“TRID could delay closing and result in a domino effect with buyers and sellers,” said Hill.

The Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) Rule, instituted by the Consumer Financial Protection Bureau, requires lenders to disclose all final costs and details of a mortgage at least three days prior to closing; that necessitated financial institutions to revamp their software programs and retrain employees in new procedures.

Brian Stevens of Listing Booster felt that TRID was a symptom of a larger problem.

“The regulators in Washington are missing the boat,” he told MPA back in September, “because we’ve never had a safer book of business.”

He likened TRID as having all the ingredients of a taco, mixing them up, and making a tostada – simply rearranging the ingredients and placing an extra cost on it.

“It is a horrible idea,” he said.

COMMENTS

  • by Anonymous | 11/27/2015 10:44:28 AM

    It is indeed awful. Those people saying it is no big deal are delusional and simply are bystanders or don't personally write mortgages, so they don't know. Look at the cost of appraisals. Just one expense to the consumer. As a direct result of TRID, and all of the software requirements to comply, the AMCs have raised the price to the consumer. Literally overnight the cost went up $50. On October 2nd it was $450 and on October 3rd it was $500 for the same report.

    Ignoring the increase in cost to the consumer due to TRID compliance is like ignoring the increase in cost due to HVCC. Again with that example, literally overnight the cost of appraisals went up $75 to $100 for absolutely no benefit to the consumer. Literally a 3rd party provides a fictitious service, skims money off the top, and adds a layer of added time and expense for an inferior product. Capitalism would have shut that awful business model down years ago if it weren't mandated by federal law.

    I predict that someday to get a mortgage you will have to go to a govt run mortgage center. There will be one option and one rate for everyone. Of course, that rate will be extremely overinflated to account for every scenario. That way the govt can fully control and regulate the entire process. It sounds like Orwellian fantasy, but ten years ago, if you would have told an originator that HVCC, Dodd/Frank, ATR, NMLS, and TRID would be in place that would have sounded like Orwellian fantasy, too.

  • by Justin Haines | 11/27/2015 11:15:10 AM

    Regulation absolutely hurts the person it is intended to "help" and in this case it is the borrower.

    Remember when mortgage officer compensation was passed? We have a fixed margin on all mortgages, because after all every mortgage is the same right ? Many lenders implemented "minimum mortgage amounts", meaning people with a lower mortgage amount than the lenders minimum would likely have a tough time finding someone to lend.

    Dodd Frank needs to be repealed and we need free market back. Let the weak companies fail, no more propping anyone up.

    End Rant

    -Justin Haines

  • by Willa911 | 11/27/2015 12:52:52 PM

    Since 2010, mortgages that have been funded are of the highest quality our industry has ever experienced. TRID, while well intended...like the previous HVCC and D/F, will continue to cost the consumer more. These laws are written and ratified by those who wish to govern the process but do not fully understand the process of providing a well structured and cost effective mortgage for the consumer. Sad really.

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