It has been more than nine months since the TILA-RESPA Integrated Disclosures rule, or TRID, took effect.
The goal of TRID, also referred to as Know Before You Owe, was to increase borrower satisfaction by replacing the Truth-in-Lending disclosure and Good Faith Estimate with new disclosure forms that are shorter and less complex and include more disclosure information for borrowers.
So how successful has TRID been in accomplishing this goal? The answer depends on who you ask.
Increased borrower satisfaction
A report released in March by the STRATMOR Group, a mortgage industry consulting firm, determined that TRID seems to be associated with a “significant pickup in borrower satisfaction,” said STRATMOR Group Senior Partner and Founder Matthew Lind. The report was based on results of a survey of mortgage and banking industry executives, along with data gathered from mortgage borrowers.
According to the report, the time to process a mortgage from application to closing increased during the first few months following TRID implementation but now appears to be returning to pre-TRID levels. Also, the percentage of borrowers who were contacted by their mortgage lender before closing has increased from 85% to 91%. Overall borrower satisfaction with the mortgage origination process is now a record 91%, the report states.
According to the survey, the majority of banks (87%) say they have either completely or mostly finished TRID implementation, with just 1% of banks saying they are “way behind” in TRID implementation.
Not surprisingly, however, TRID has increased lenders’ back-office fulfillment and post-closing costs. “Implementing TRID has obviously not been easy for lenders,” Lind said in an April 26 news release by the STRATMOR Group. “It’s been costly as well.”
According to the STRATMOR Group report, these costs have increased by $209 per loan since TRID was implemented last October. What’s more, lenders are recovering only 17% of these costs through additional charges, Lind said in the release. Put another way, lenders are absorbing most of these costs themselves instead of passing them on to borrowers.
A survey of bankers conducted in February by the American Bankers Association paints a less flattering picture of TRID than the STRATMOR Group report. Approximately 77% of bankers responding to the ABA survey found that loan closings are being delayed as a result of TRID and more than nine out of 10 (94%) think the TRID good-faith grace period should be extended.
In addition, about a third of bankers said their TRID experience has been either “difficult” or terrible.”
“It’s clear from this survey and our discussions with bankers that TRID compliance remains a significant concern,” ABA Executive Vice President Bob Davis said in a news release published by the ABA in March.
ABA Senior Vice President Rod Alba said the impact of TRID on lenders has been “massive.” “Lenders have faced huge expenditures to comply with TRID in the form of system updates, re-education, risk reassessment and legal advice, and relationships with third-party partners, such as settlement agents,” Alba said in an ABA news release in March.
‘Business as usual’
Jay Voorhees, associate broker, RE/MAX in the Atlanta area, said the impact of TRID on real estate agents he has been fairly muted.
“TRID was feared as the Y2K of the real estate industry but my experience as an agent has been pretty much business as usual,” he said. “This is probably due to the lead time given prior to implementation for both lenders and attorneys.”
Voorhees said the biggest impact on real estate agents is probably “lost sleep due to the many new delays and issues that TRID creates when it comes time to close. Borrowers should make sure they’re working with the best lender and attorney they can find because the file and documentation need to be exactly right all along the way.”
There may be some positive news for banks. In April, the Consumer Financial Protection Bureau announced it plans to make updates to TRID this summer and will seek input from the banking industry.
In a letter to a coalition of industry trade groups, CFPB Director Richard Cordray acknowledged that TRID “poses many operational challenges.” “We also believe that there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity,” Cordray wrote in the letter.
Freelance writer Don Sadler contributed to the writing and research of this article.