TILA-RESPA Integrated Mortgage Disclosures

Integrated Mortgage Disclosure goes into effect October 3, 2015.

Are YOU Ready?

Why the need to change the consumer mortgage lending disclosure forms now? 

The law requires us to! The TILA/RESPA Integrated Mortgage Disclosures Rule (TRID) is an attempt to simplify mortgage disclosure forms, and make the mortgage loan process easier for consumers to understand.  For more than 30 years, lenders have been required to provide two different disclosure forms when a consumer applied for a mortgage loan, and two other disclosures at or before loan closing. These forms were created by two different federal agencies and contained overlapping information and confusing language. TRID consolidates all of these disclosures into simplified forms, and integrated mortgage disclosures, under the rules of one agency, the Consumer Financial Protection Bureau (CFPB).

What's changing?

The ROC™  reduced the 1,888 pages of regulatory language to a few easy to understand points:

  • The Good Faith Estimate (GFE) and initial Truth-in-Lending (TIL) disclosures are being replaced by one form - the Loan Estimate. The Loan Estimate must be provided no later than three business days after receipt of a completed application and received by the consumer no later than seven business days before consummation.
  • The HUD Settlement Statement and closing TIL are being replaced by a single Closing Disclosure. This Closing Disclosure form must be received by the consumer at least three business days before consummation of the loan.
  • Lastly, the following loan types also will be covered by the new disclosure requirements.   Note that these are currently exempt from Real Estate Settlement Procedures Act (RESPA) disclosure rules:
    • Construction-only loans
    • Loans secured by vacant land or by 25 or more acres
    • Credit extended to certain trusts for tax or estate planning purposes

Timeline

By now you should have analyzed which of your products and services will be affected by the new rules and the scope of the impact on your institution. These areas of concern should have been communicated to your board and management so they could make any necessary decisions well before October 3. Here’s a summary of what to focus on between now and the October 3 effective date: 

Design

Q2 and Q3  you should be designing your implementation plan. You can do this in house or work with a team of compliance strategy experts to identify what action steps are needed, who is responsible for what, and the specific deliverables and deadlines. You should also assess the risk implications and how they will be mitigated or tolerated.

Develop
Your new Integrated Mortgage Disclosures Rule procedures are being written, training materials are being developed (and training scheduled), and audit plans are being updated. Software updates should be completed, or your software provider should be giving you their schedule for completion of these updates. During this time if you are part of the Continuity network, you have complete access to our team of experts in both the ROC and Strategists to ask questions, help build materials and assist with planning and launch. 

Test
It is time to test the strength of your TRID compliance program. Run tests of your processing, systems and quality control activities to ensure you will be compliant on August 1. Include various loan types and terms, and verify that calculations are accurate. Expect to find a few errors, and if you do, there is still time to tweak those and re-test. 

With the Continuity Control Platform behind you, it is easier then ever to test out new compliance processes. With a simple To-Do you can track everything from pushing out the new process to everyone who is affected but also easily monitor and manage everyone staying up to date with their to-dos and making sure your institution is compliant. 

September - Training
Spend this month training all affected staff on the rule’s requirements and your new procedures for complying with the Integrated Mortgage Disclosures Rule.

October - TRID becomes effective and you are ready!  

In the Q1 2015 RegAdvisor, Continuity reported that in order to comply and be prepared for the IMD Lender Orginators Rules which was due by February 19, 2015 it would take the average community financial institution 5 roles (unique people) 25 hours to review and comply with only this piece of TRID. The cost to your institution is and average of  $1125* that your institution could be saving by automating your compliance and letting the experts here at Continuity help you.  

 

 
*Assuming an average salary rate of $45.11/hour. 
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