Rob Chrisman

Daily News & Commentary

  • Daily Mortgage News & Commentary
  • About
    • Rob Chrisman
    • Marie Chrisman
    • Robbie Chrisman
    • Anjelica Nixt
    • Ed Rosenthal
  • Archives
    • Calendar of Posts by Month or Week
    • June 2013 to Current
    • Prior to June 2013
  • Advertise
    • Advertise on Rob Chrisman – Banners & Commentary
    • Podcast Sponsorship
    • Pay Pre-existing Invoice
    • Sample Overviews in Reporting/ & Analytics
  • Subscribe
  • Help
    • Request for analytics
    • Constant Contact Reports

Aug. 1: Concerns, questions, and suggestions on TRID-related paperwork, HUD-1, and the Loan Estimate

August 1, 2015 by Rob Chrisman

About Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 35 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...

Regarding TRID paperwork, I continue to receive complaints and warnings. This is from a broker on the West Coast. “We don’t need new laws; just enforce the ones we have. The original forms were the best. A good idea would be to add a definition page to the line item GFE. Everything is explained. The CFPB is a behemoth agency, and TRID echoes that. TRID is going to add time and cost to the consumer, although it seems the banks will make more money. Higher rates in general, plus initial interest rates will be higher due to 45 and 60 day lock periods. All paid by the consumer whom the government says it is doing everything to protect. Who is going to protect us from the government?”

 

And from an industry vet in the Atlantic Seaboard: “The question is the same I proposed to CFPB 3 years ago: why will the CFPB not start from scratch with all the forms and rules and build a simple, concise and informative national mortgage application package and process, rather than just pouring ill-conceived and poorly developed papers and processes upon the consumer and industry. One rule on top of another and the younger members of society become more and more disillusioned with the process and government protections. When a well-educated non-industry individual recognizes that the supposed protections are obstacle and openly cost the consumer excessive fees, it is time for government to re-evaluate its purpose and effectiveness.

 

“Are the Rules exhibiting a factual benefit to the consumer? It has always been my understanding that consumer protections were to in fact to protect the consumer from excessive charges by an industry, any industry, upon the consumer. So how is a Law or Rule a consumer safeguard, other than in name only, when the new rule and law actually impose additional and excessive fees upon the consumer. Where is the consumer benefit? How will TRID, in any fashion, better educate the consumer to the cost of a mortgage when compared to the original 1970’s GFE? Open Proposal: If CFPB honestly believes the LE is a better document than the original GFE, ban all segments of the industry from is using the WorkSheet or even giving the consumer itemized costs beyond the LE.”

 

And from a broker: “I have more questions on TRID than answers. I’ve been told one larger wholesaler has a website for the borrower’s confirms, one for the closing agent, and one for the brokers. On the one hand the liability is on the wholesaler. On the other hand, if we actually do the LE at the wholesaler’s website then it will be in the wholesaler’s name. Now for my technical concern: under TILA brokers are creditors, and creditors have to supply a TILA within 3 days. But if we supply the wholesalers as ours is this a TILA violation? As I see it, TRID is a solution in search of a problem. These forms are no better than the 2010 GFE disaster at disclosing the costs to the borrower.

 

Switching gears slightly, I received this question from a veteran Ops person. “With the HUD I going the way of the dodo bird, what will serve all of the many purposes for which we use the HUD today? The Closing Disclosure (CD) doesn’t contain the requisite attestation verbiage, nor does it necessarily show all disbursements or both sides (buyer/seller) of the transaction, which are used for both qualifying and compliance purposes today. Fannie & Freddie have not commented on what constitutes sufficient documentation for “salability” and the industry lacks general direction on this topic… What are you hearing?”

 

The first is to consult Freddie Mac’s Bulletin 2015-10 from late June. Or try Fannie Mae’s.

 

But I received several answers continuing to illustrate confusion in the industry, and seeking leadership from the Agencies. This from a well-known correspondent operations head: “Since lenders currently use the HUD I from a sale to evidence a borrower’s cash to close and qualification, as well as a certification that all was completed in accordance with the representation therein, I think there’s still a gap, in addition to the lack of Agency guidance.”

 

And, “I don’t understand how the wholesale lender can generate a Loan Estimate when they don’t have any information. Will the borrower contact them through the web site and complete a 1003? Consumer-completed 1003s are worthless. Who is going to provide all the specific, upfront info that must be on the LE? The consumer? The realtor? That is a joke. Someone better get to someone that is willing to stand up and stop this train wreck.”

 

And this from a person “in the know” at Freedom Mortgage. “The ALTA created a funding breakdown form (ALTA Settlement Statement) for use in breaking out the fees and disbursements. It’s my understanding ‘most’ title companies will adopt this form and product it at closing as an ancillary document. Freedom will require it be provided by the closing agent.”

 

This from a West Coast mortgage banker’s compliance chief: “The GSEs, as directed by the FHFA, are supporting the use of the Closing Disclosure. They have updated delivery policies stating that they will require all borrower and seller signatures on the Closing Disclosure. This may a bit lesser known, but they also require refinance transaction to use the Alternate CD Form (previously the HUD1a was optional). The UCD has been specifically updated to handle the CD fields and will promote in Fannie’s words ‘Greater data consistency, improved data accuracy and a common understand.’ The actual HUD 1 Settlement Statement today does have no specific attestation language. I would also disagree with the statement that it does not show this information; I do believe it does show all disbursements or both sides (buyer/seller) of the transaction, which are used for both qualifying and compliance purposes today. Page 3 of the CD is mirror’s page 1 of the HUD1. Page 2 of the CD is used in the same way page 2 of the HUD1 and where all disbursements would be captured. The standard HUD1 has no specific language; the writer must be referencing the HUD1 addendum used for FHA loans where the borrower attest to the accuracy (truthfulness) of the HUD1 and HECM purchases which require some additional HUD1 language is not covered under the new TRID. So these addendums do not pertain to conventional conforming loan.”

 

Tracy Sanderson from Washington’s Banner Bank wrote, “Here’s my take:  HUD isn’t ‘going away.’ It was established in 1965 to develop national policies and programs to address housing needs in the US. One of HUD’s primary missions is to create a suitable living environment for all Americans by developing and improving the country’s communities and it was also tasked with enforcing fair housing laws. In my opinion, HUD has always been busy insuring FHA loans. RESPA has made kickbacks illegal since the 70’s, but there was no strict enforcement. The CFPB is the new sheriff in town, with a new set of rules, and they mean business. This is welcome relief to lenders who do follow the rules. Trivia Fact: did you know that this country’s system of building and code is a direct result of HUD requirements for FHA loans?”

 

Tracy’s note went on. “First, the HUD1 Settlement Statement will still be used for loans that are exempt from TRID (reverse mortgages, HELOCs, etc.).  While the new Closing Disclosure is not identical, it will replace the old HUD1 on loans that are not exempt. The CFPB has acknowledged that there are items that are not addressed (such as earnest money deposit) and expects creditors and real estate agents to work together to ensure the consumer receives proper credit. And second, neither Fannie nor Freddie has ever really addressed compliance issues. They leave it to the lenders to ensure they are compliant. Freddie recently published Guide Bulletin 2015-10 to update terminology used, but I wouldn’t expect more than that.”

 

From an industry vet. “The question is accurate that the current HUD has you acknowledge the receipt and review of the document. The CD just asks: By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form. On the payoff aspect, Pg. 3 itemizes the payoffs. There is a separate CD that the seller receives. One thing worrying me is that they Wholesalers are all building their own websites, not generic ones that will generate the LE for the borrowers. They will not accept ones from Brokers because of the liability. Issue is, under TILA, brokers are creditors and the brokers are responsible to give the borrowers a LE. I don’t think it can be from a third party. Or what happens is the lender makes and error and the broker doesn’t pick it up. Both are responsible individually.”

 

Andrew Liput with Secure Settlements contributed, “There are many issues rolled up into this one question. Obviously the purpose of the new form is not as a stand-alone document but to compliment the Loan Estimate and other loan documents. With the intent on making the closing process less complicated the new form does appear to offer more itemization and a clearer picture of just who is getting paid for what and therefore is a useful instrument for consumer protection. Because lenders must verify disbursements have been made in compliance with the Disclosure, settlement agents really must be creating and returning to the lender (copying the parties) a separate disbursement ledger that documents all disbursements. As for sale-ability, as with any new product, document or process, the investor community will always dictate what they will require beyond regulatory demands, and so far I have not heard anything beyond the obvious fact that the Closing Disclosure be included in the loan file. These things, however, change over time, which means the CFPB could change the form again, and investors could for example start requiring that the disbursement ledger also be included perhaps with copies of canceled checks and wire receipts.”

 

And finally another concern regarding new documents. “On Page 3 of 4 on the CFPB’s completed Fixed Rate Loan Estimate there lies ‘Section C’: ‘Services You Can Shop For.’ As I recall, all fees a consumer incurs have to be listed in this Section C. Yes, the CFPB lists Pest Inspection. However, are fees like home inspection, condo application fees, condo move in fees, septic testing fees, etc. to be listed here? If these fees are to be listed, as I suspect since they will appear on the CD, do the realtors have a fiduciary duty to disclose these fees? I’m guessing the loan would be terminated without the disclosure of these fees, but I cannot confirm nor deny these concerns.

 

The fees that must be disclosed on the Loan Estimate are 1. Origination Charges the consumer will pay (points, doc prep, wire transfer); 2. Charges consumer will pay for settlement services for which they cannot shop (appraisal, 442, credit report, draw inspections, flood cert, tax service); 3. Charges consumer will pay for settlement services for which they can shop (title and escrow); 4. Charges to be paid by the consumer to State and local governments for taxes and other government fees (transfer taxes and recording fees); 5. Prepayments paid by consumer (tax and insurance prorations); 6. Amounts consumer is expected to place into a reserve or escrow account at consummation (reserves for taxes and insurance); and 7. Other amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay at closing and of which the creditor is aware of at the time of issuing the Loan Estimate (owner’s title, home inspection, home warranty, commission). The creditor cannot disclose something they are not aware of, obviously, and the amounts that must be disclosed would be those the consumer will pay at closing. Many have found the TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure Forms (dated 03/20/15) that is on the CFPB website to be very helpful. In the end, guidance from your own compliance department will be critical.

 

 

Did you ever wonder why earrings became so popular with men?   A man is at work one day when he notices that his co-worker is wearing an earring. The man knows his co-worker to be a normally conservative fellow and is curious about his sudden change in “fashion sense.”   The man walks up to him and says, “I didn’t know you were into earrings.”   “Don’t make such a big deal – it’s only an earring,” he replies sheepishly.   His friend falls silent for a few minutes, but then his curiosity prods him to ask, “So, how long have you been wearing one?”   “Ever since my wife found it in my truck.”   I always wondered how this trend got started…..

 

 

Rob

 

(Copyright 2015 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.)

Filed Under: Daily Mortgage News

Purchase Bootcamp Virtual Private Event – RON VAIMBERG

FlexClose

FlexClose

FBC Mortgage, LLC

Open Mortgage

American Financial Network

Future of Real Estate Summit

DeepHaven

NAN

PacRes Mortgage

Private Lending

Constructive Loans

Richey May

Richey May

LodaSoft

The Mortgage Link

Service 1st

Service 1st

Point Mortgage

Hartford Funding

Harrison National Employment

Harrison National Employment

ICE Mortgage Technology

Baker Tilly

Capacity

Capacity

MGIC

MGIC

Churchill Mortgage

Mr. Cooper Correspondent

Mr Cooper Correspondent

University Lending Group

GSFA

GSFA

LenderLogix

Edumarketing

Loan Depot

Evolve Mortgage Services

HomeStead Funding

NP INC

NP INC

Omega

Excelerate Capital

TENA

TENA

Matic

A&D Mortgage

ADMortgage

Specialized Mortgage Services

Specialized Mortgage Services
​

AAG

FundingShield

Armco

Quorumfcu

CHLA

Supreme Lending

Ncontracts

Directors Mortgage

American Pacific Mortgage

Advancial Federal Credit Union

LoanCraft

See Your Company Ad Here

Mortgage Capital Management

Verity

SimpleNexus

SitusAMC

Incenter

TotalExpert

Western Alliance Bank

Experience.com

The Money Source

First International Bank & Trust

Qualia & Stratmor Group

Vice Capital

XINNIX

Black Knight

Stewart

Myvolly

Meridian

See Your Banner Ad Here

Phoenix

GHMC

Nomis

LD Wholesale

ACES Quality Management

ActiveComply

LoanStream Mortgage

ACT Appraisal

Recent Posts

Aug. 6: Vendor/3rd party products; opting out of credit lead selling; jobs number: what recession? Saturday Spotlight: Calque

Aug. 5: MLO jobs; u/w productivity, bid tape/AOT, origination, doc handling products; National MI and Equifax; payroll data drives rates

Aug. 4: Comp study; profitability, BI, QC, API, non-QM, HELOC products; OpenDoor penalty; Two Harbors/RoundPoint deal

Aug. 3: AE, MLO jobs; private MI, servicing testing, broker pricing, DPA products; conforming conventional updates

Aug. 2: LO jobs; cap. mkts., non-warrantable condo, automation products; retail product news; Taiwan helping drive rates

Aug. 1: MI job; DPA, revenue, decisioning jumbo products & tools; upcoming events & webinars; more on the Fed

July 30: The ins and outs of servicing rights; Fannie deals; primer on... runway numbering? Saturday Spotlight: Change Wholesale

July 29: MLO jobs; M&A advice; compliance, BI platform, community bank products; the NBER, GDP, and recessions

July 28: MLO jobs; broker products; underwriting, customer service tools; RON progress; new exchange-traded TBA product

July 27: Hedging, MLO jobs; broker, pricing, workflow approaching events, training, webinars; Fed Day as new apps hit 22 year low

July 26: MLO jobs; lead gen, Spanish app, REO mgt., subservicing tools; conforming conventional changes; rates sliding

July 25: MLO jobs; digital, compliance, automated workflow, home equity products; rural, FHA, and VA news

View the Posts by Month or Week

Subscription Service

Click Here to Sign Up for Daily Commentary
You should begin receiving the commentary within 24 hours. If not, filtering may be taking place; attempt sending request from an alternative e-mail address. Email Rob at Email Having trouble receiving commentary? Please check our help section.

Handcrafted with by HSS. Powered by the Higher Source Sites. Get in Touch.

© 2008 - 2022 · Rob Chrisman · All Rights Reserved