Feb. 20: TRID pains and Calyx’s take on the situation; difference in how banks and independent MBs are expanding

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. Read more...

In an earlier commentary Dr. Matt Lind at STRATMOR provided results from a survey that seemed to show that lenders were relatively pessimistic about the industry, but optimistic about their own ability to compete.  I received some responses, and showed that lenders are thinking about how to weather the changing environment.  Some also asked, “What do we do about it?” and Dr. Lind actually has some ideas on that too, and indicated that the survey results also showed that both banks and independent’s 2016 growth strategies for their retail production platform are focused on adding/acquiring new branches and LOs in both existing and new markets. No surprises here, noted Dr. Matt. But independent mortgage bankers are much further along in implementing such strategies. Banks tend to be in the ‘planning’ or ‘under consideration’ stages as regards such growth strategies whereas Independents already have such strategies in place or are in the process of implementation. It seems clear that Bank owned or affiliated mortgage lenders face more cumbersome internal decision processes than do Independent lenders.

 

Dr. Lind wrote, “A striking survey result was the extent to which both banks and independents are placing a high priority on using advanced data base/social media marketing tools to generate high quality leads and lead management tools to more effectively handle such leads. The objective here is to improve lead-to-application and pull-through ratios thereby improving both LO and back office productivity. In a slower growth market, with no rising tide to lift all boats – lenders will need to steal share from their competitors.” While productive back office processes remain important, “We believe that the competitive landscape is tilting in favor of marketing and POS prowess,” added Garth Graham, Senior Partner in charge of STRATMOR’s Sales and Marketing Strategy advisory services.

 

Dr. Lind’s note continued. “This emerging trend to develop front-end capabilities is in line with the number one long-term concern (83%) cited by lenders: namely, the slow growth outlook for the mortgage industry and where individual company growth will come from. For those of you who are interested in more detail, the full Peer Views 2016 Outlook & Go-Forward Strategies survey results can be purchased at http://www.cvent.com/d/bfq9mc.”

 

Some companies seem to be experiencing growing, and TRID, pains more than others. Over the last few months I have received a number of comments about Calyx Point’s disclosure forms, probably in large part due to different products – with some lenders being on the older program and others being on the new program – and confusion due to vague “rules” from the CFPB. “What company would require you to input information into 100% useless forms (GFE, TIL, etc.) in order for the info to populate into the new forms (LE)?” And, “What is wrong with the Calyx 800 number? Hold times are way beyond normal.” And “I pull credit with Credit Plus through Calyx. I obtain the report, but the report does not populate to the 3rd page of 1003.” Of course users should download the latest version.

 

One broker wrote observing, “The TRID rule was oddly integrated so Calyx has to have a software system that’s used by both brokers, bankers, and small servicers function a cross the playing field. TRID has to keep the GFE in the system on construction loans until they close. I had a construction loan from September but my client didn’t break ground until December, and it could take a year to build – what about that?

 

“And when one couples that with flaws in TRID things become sticky in a hurry. For example, on an LE for a FHA purchase the form tells the borrower what to bring. In fact it is wrong. It is the amount less the MIP. Supposedly the CFPB has verbally told lenders that’s how regulators want it. I called Calyx and after about 20 min on hold and 2-3 transfers I got to it and was told that CFPB told them to do it that was.

 

“Hold times on Calyx vary, but management really needs to find a way to fix a lot of flaws. You cannot run two companies out of Calyx without constantly changing things. The pre-done forms are incomplete and leave a lot to be desired but they are not wrong.”

 

Another broker wrote saying, “We have used Calyx Point for many years and it has served us well for the most part. It is a great LOS for small broker operations. Now, however, their customer service department will not respond either by email or by phone, and their latest version has two unbelievable issues with regard to the LE. The first is that it deletes the lender credit. No matter what you put in as the lender credit in the Fees Worksheet, the lender credit on the LE will be $0. The second issue is that on refinances, it deletes the payoff of the current mortgage loan. So if you are doing a no cash-out refinance with a new loan of $500,000 it will show estimated cash to close of $500,000 less the closing costs (something like $495,000 cash to the borrower on a rate/term refi).”

 

I ran these concerns by the folks at Calyx and received a response from Dennis Boggs, Executive Vice President at CalyxSoftware. “First of all, Rob, thanks for giving us the opportunity to respond to the comments you’ve received. Before responding to the specific concerns that were raised, we’d like to make a few general observations. TRID has presented enormous challenges for everyone: brokers, lenders, investors, LOSs, doc providers, settlement services companies, Realtors, etc. Our guess is that everyone has ‘war stories,’ particularly about the early days of implementation and/or about less-common loan scenarios.

 

“That said, Calyx’s name probably comes up often for several reasons. First, we are a ubiquitous LOS, used by thousands of lenders and mortgage brokers. Second, our mix of clients: our users, whether they are lenders or brokers, tend to be small to mid-sized organizations. And it’s not uncommon for brokers, for example, to operate without an IT department, a compliance officer or a system expert.

 

“We’re working with a large group of small business owners and originators, who are trying to wear multiple hats when it comes to TRID. This is very different than dealing with just one client ‘primary’ to handle support issues and/or dedicated compliance professionals.

 

“To help prepare our clients for TRID, we offered:

  1. a) Two-day symposiums in different locations across the country: Day One included a panel of experts and a representative from the CFPB; Day Two focused on training
  2. b) Free pre-TRID webinars
  3. c) Free live (and recorded) online training classes (40 classes)
  4. d) Instructional videos prior to our latest release
  5. e) 24 new Knowledge Base articles
  6. f) Customized training with our Professional Services Group (at a cost)

 

“We also staffed up our call centers and online help desks. But frankly the initial volume of calls was overwhelming. So we will own up to some of the dings about hold times and delays on responses.

 

“Since October, however, we have updated our phone system and purchased a new call software system. We have also added 25% more staff to our Customer Support Call Center team, and increased our QA staff by 33%. It’s also important to remember that our customer support is 100% free to all primaries and users. Anyone can call for help and support.

 

“That said, many of the callers are looking for more than technical support: They’re asking us to teach them how to process a TRID loan or to be their compliance expert. These discussions, as you’d expect, are time consuming, and probably, occasionally frustrating for the caller.

 

“The rules, as one of your folks said, are vague, and have been reinterpreted as issues have ‘popped-up.’ When that occurs, the only way we can see to address them is through additional releases. This is undoubtedly annoying, but it’s really the only way to deal with this fluid situation. A good example of one of the key issue we have addressed with SP9 is about ‘Loan Amount can differ in LE and CD’. This wasn’t clear in TRID, but we talked with the CFPB and got the confirmation that it’s okay, so then we updated and released 9.2.

 

“Also, in some cases there is a lack of alignment between what the CFPB requires under TRID and what other agencies, notably FHA, require (see below). But this is an industry issue, not a Calyx specific one.

 

“Now let’s go point for point:

 

“’What company would require you to input information into 100% useless forms (GFE, TIL, etc.) in order for the info to populate into the new forms (LE)?’

 

“Obviously we developed TRID-specific screens for Point, but since the TIL and LE forms use much of the same basic information, and the TIL screen was already the primary data entry screen, we kept it. Also, users doing HELOCs and reverse mortgage still need to use GFE and HUD-1 forms.

 

“‘And when one couples that with flaws in TRID things become sticky in a hurry. For example, on a LE for a FHA purchase the form tells the borrower what to bring. In fact it is wrong. It is the amount less the MIP. Supposedly the CFPB have verbally told lenders that’s how regulators want it. I called Calyx and after about 20 min on hold and 2-3 transfers I got to it and was told that CFPB told them to do it that way.’

 

There is a disconnect between how the CFPB wants these calculations done and how the FHA does its calculation. We have raised this issue publicly and brought it to the attention of the CFPB. Their direction was to continue doing it the way our release does it. We assume that other LOSs and doc companies have gotten the same direction that we have.

 

“The confusion stems from the terms ‘Total Loan Amount’ and ‘Base Loan Amount’ which are FHA/VA terms. The CFPB does not have ‘Total Loan Amount’ and ‘Base Loan Amount,’ instead it has simply uses ‘Loan Amount.’

 

“Point handles this calculation correctly and it has since day one. We have checked this issue with the CFPB multiple times before and after we have released LE/CD.

 

“’Now, however, their customer service department will not respond either by email or by phone, and their latest version has two unbelievable issues with regard to the LE. The first is that it deletes the lender credit.  No matter what you put in as the lender credit in the Fees Worksheet, the lender credit on the LE will be $0. The second issue is that on refinances, it deletes the payoff of the current mortgage loan. So if you are doing a no cash-out refinance with a new loan of $500,000 it will show estimated cash to close of $500,000 less the closing costs (something like $495,000 cash to the borrower on a rate/term refi).’

 

“This is actually several points. 1) Yes, we have had some volume issues. But we are responding by phone or online to all questions, usually within 24-48 hours. 2) Point doesn’t delete the lender credit on the LE, but the workflow, and what data automatically populates from the Fees Worksheet to the LE, has changed. Some data, like lender credit, now has to be manually entered on the LE. We recognize that we need to help our clients understand these changes, which is why we offered new Knowledge Base articles and numerous webinars, as well as previously recorded sessions posted on our website, for everyone to access at no charge.

 

“3) As far as the refi example, the earlier version of Point automatically updated the LE every time a change was made on the 1003. Because this could create problems if LOs or other parties made changes on the 1003, a decision was made to de-couple the LE and the 1003. The latest release addressed this by adding a payoff and adjustments screen to cover changes and liabilities. But it no longer automatically adjusts the LE. To do that, the user has to hit a button that copies liabilities data and populates it into the LE. Our users were alerted to do this and it was covered in a Knowledge Base article. But it is easy to see how this change could have been missed.”

 

Thank you Dennis!

 

 

A woman appeared at the pearly gates and met St Peter. St Peter welcomed her and said that since had led a good life, she could enter if she could spell one word: Love.

She did and as she entered, St Peter got called away and asked her to be the gate keeper while he was away.

Just after St. Peter left the woman’s husband appeared at the gate. She was very surprised because he had been in good shape when she died. They had fought most of their marriage and she was not happy to see him so soon.

She asked him why he died so soon, and he replied that he had died in a car wreck after leaving his new girlfriend’s place.

She told him that she was manning the gate while St Peter was busy and she said he could enter if he could spell one word:

Czechoslovakia

 

 

Rob

 

(Copyright 2016 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)