TRID Is Dead, Long Live TRID, and Other Contradictions Heard at the MBA Regulatory Compliance Conference

Vong, John I., CMB, CMT

September 29, 2016

John Vong, CMB, CMT, is president of ComplianceEase, Burlingame, Calif., a provider of risk management services to the financial services industry. ComplianceEase's platform includes ComplianceAnalyzer, a widely adopted automated compliance platform. For more information, visit www.ComplianceEase.com or call 1.866.212.Ease(3273).

In feudal times (and by that I don't just mean pre-Internet), when a monarch died, a proclamation would be made: "The king is dead, long live the king!" The point being: yes, things have changed, but fear not, they haven't changed that much and continuity still reigns.

At the Mortgage Bankers Association's Regulatory Compliance Conference in Washington, D.C., last week, I realized this contradictory phrase could also be applied to the TILA-RESPA Integrated Disclosure rule and mortgage regulations in general. Rules change, but they are immediately replaced by new ones. And the quest for understanding and guidance continues.

Think about it: This time last year, we were getting ready and testing our technology for TRID. This year, we are awaiting the coronation of the son of TRID (TRID the Second?)

In the meantime, lenders are trying to sell these TRID mortgages, but because each investor has its own guidelines for compliance reviews, there are no consistent processor standards. Lenders are also preparing for their inaugural TRID exams, which was the topic of my session at the conference: "Planning for CFPB TRID and Servicing Exams."

My fellow panelist, Don Lampe, partner with Morrison & Foerster, said Consumer Financial Protection Bureau exams, particularly TRID exams, are data-driven and begin with a detailed questionnaire calling for documents and data. Compliant results will be ascertained through loan-level reviews and the comparison of data elements from all of the loan estimates and closing disclosures.

Lampe added that the CFPB is considering the efficacy of the originator's technology, such as workflow management system and loan origination system (LOS), as a pathway to loan-level compliance. Having said that, many lenders that I spoke with at the conference had no idea if their LOSs are TRID-compliant or could be relied on as a system of record. (But ironically, many do think their LOS providers will handle TRID 2.0 better than TRID.)

The announcement of TRID 2.0 this July seemed to add even more complications and contradictions, according to some of the attendees. While some feel they have better clarity in many areas and now have more confidence in what is expected to close compliant loans, others are still looking for more practical guidance, particularly around cure provisions.

Of course, the other four-letter rule on everyone's lips at the conference was HMDA (or the Home Mortgage Disclosure Act). Who's ready and who's not? Most of the larger lenders have developed project teams to address the upcoming changes and have started the planning phase.

Smaller lenders, on the other hand, are relying on their compliance vendors, but many are still not thinking about the behavior change that will be required from the production teams in order to ensure data integrity. Loan officers, in particular, need to change how they collect government-monitoring data. Yes, technology can help, but only to a certain extent.

Finally, what do MBA Regulatory Compliance Conference attendees think the future holds in terms of regulations? Mortgage lending regulations may be slowing down a little bit on the federal level, but ramping up on the state level. With either a Clinton or Trump presidency, there will certainly be a different regulatory landscape. The recent enforcement action against one of the largest banks and mortgage originators has also called into question the likelihood of CFPB reform.

TRID is dead, long live TRID 2.0!

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mba.org.)

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