TRID implementation adds more than $200 per loan

by Ryan Smith23 Mar 2016

TRID implementation has hiked the price of origination by more than $200 per loan, according to a new study.

“On average, since October 2015, TRID has increased lender back office fulfillment and post-closing costs by an average of $209 per loan, and lenders are estimating that only about 17 percent of those costs can be recovered through additional charges,” said Matthew Lind, founder and senior partner of STRATMOR Group, which conducted the survey.

Indeed, according to the MBA’s Quarterly Mortgage Bankers Performance Report, mortgage profits cratered after the Know Before You Owe rule took effect. The report found that independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $493 on each loan originated in the fourth quarter of 2015. That’s down from a gain of $1,238 per loan in the third quarter.

“Production profits dropped by over sixty percent in the fourth quarter of 2015 compared to the third quarter," said Marina Walsh, MBA's vice president of industry analysis. 

But TRID isn’t all bad news, according to STRATMOR’s study. The report found that borrowers seem to be happier under the new rules.

“TRID seems to be associated with a significant pickup in borrower satisfaction, despite somewhat slower application-to-closing times,” Lind said, according to a National Mortgage Professional report. “At the end of the day, improving the borrower’s experience is a main objective of TRID, and in an increasingly competitive origination market, it is also a primary goal of lenders as well.”