In the nearly two years between the finalizing of the TILA-RESPA Integrated Disclosure (TRID) rule and its implementation, theories about what might happen with the new forms abounded. But without a chance to use the forms before Oct. 3, that’s all they were – theories.
One month into implementation, transactions still are going through the pipeline, and no extreme issues need to be addressed. However, there are areas that have created confusion among lenders and settlement providers, and plans that might have been in place before Oct. 3 have not always been carried out as expected.
Different procedures
Although many lenders informed title agents that they were going to proceed a certain way, there have been several lenders change those procedures in the short term.
“I’m anxious to see early on how lenders communicate early on to settlement agents that they were going to be 100 percent integration only, but closing instructions are coming through email, some lenders are telling title agents that the lender CD is the master and the settlement agent just needs to reflect that in their systems, we see all derivations of practices that we anticipated,” said Mary Schuster, executive vice president and chief product officer for RamQuest.
Leslie Wyatt, director of industry relations, SoftPro Corp., has seen similar trends.
“It’s been interesting because before, the lenders were [saying they were going prepare the CDF] and now I’m hearing from agents that lenders are asking them to prepare the CDF. Some of them are saying, ‘They said they are going to do it, but they are not ready, so we need to do it,’ or, ‘They are small and don’t have the software so they send us the package and want us to do it’ or ‘They do it, but they want us to deliver it,’” she told attendees at ALTA’s annual convention.
Craig Haskins, chief operating officer, Knight Barry Title Inc. said that his agency has helped a few lenders issue CDFs because their software wasn’t ready.
Charles Cain, WFG executive vice president, said he has heard similar stories from agents, but expect this to be a short-term situation.
“In many cases smaller lenders are asking the settlement agent to prepare the Closing Disclosure and in a few cases, to deliver the Closing Disclosure,” he said. “I don’t think that practice will hold up very long. I think it’s just a matter of time before either bank auditors or regulatory auditors tell those lenders [not to do it that way].”
Quoting
David Townsend, president and CEO of Agents National Title Insurance Co., said the biggest pain point he’s seen is in providing quotes for lenders.
He said that the way lenders get quotes is varied, as well as what gets included in the premium being quoted. Townsend pointed out that although some states have a predictable rate, such as Ohio which has a rating bureau, the premium in other states, such as Missouri, vary based on the underwriter.
“Unfortunately, a lot of the calculators out there do not provide for different underwriters, so getting accurate quotes right now [is difficult],” Townsend said. “The agents know what they need to be doing, but the agent might deal with 30 different lenders and get 30 different ways to provide quotes.”
Simultaneous issue rates and owners policies
The industry has been preparing to explain to consumers how simultaneous issue rates are disclosed, but lenders also have been confused about the new formula for disclosure.
“We’ve issued a zillion title quotes to lenders to help them understand them how to properly disclose title premiums in Wisconsin using the weird TRID math for their LE,” Haskins said. “Now after all of the lenders are getting comfortable with issuance of the LE, lenders are now struggling to understand exactly how to show the owners and loan policy premiums on the CD. Part of the reason is that the regulations and the CFPB webinars on this topic provide at least three ways a lender may disclose the premiums, and we haven’t seen one of those three ways become the norm. As there are potentially three if not more ways to disclose, this makes it difficult for us to explain to the consumer the real cost that they pay.”
Nancy Silberberg, President of The Escrow Institute of California and Altus Escrow Inc., said that she works with at least one lender who is not doing what she dubs the “magical math” of the simultaneous issue rate. That lender informed her that because the lender knew the seller was going to be paying for the owner’s policy, the lender was not going to put the owner’s policy on the Loan Estimate and only reflect the concurrent Lender’s rate on the Consumer’s CD.
Vincent Danzi, senior vice president and senior counsel, First Nationwide Title Agency LLC, said that many real estate attorneys he’s talked to have been uneasy about the depiction of owner’s title insurance as optional and expects that to be even more of an issue with lenders that don’t include owner’s title insurance on the Loan Estimate.
Townsend said he has seen similar practices, as well.
“Some feedback we’ve seen is that they are quoting the buyer side, but if the seller is paying for owner’s policy, they are not concerned about quoting that on the Loan Estimate because it’s a seller fee,” he said.
He also said the issue springs up the most with lenders that cross over geographic boundaries that have different practices.
“You look at Missouri,” Townsend said. “In St. Louis, the buyer pays for everything. In Kansas City, the buyer pays for the loan policy and the seller pays for the owner’s policy, and those could be issued by two different underwriters through two different agents.
“Elsewhere in Missouri, it’s split 50/50 for the closing costs. So if you have a lender that operates throughout Missouri, there could be three or four different ways of calculating a purchase transaction.”
For more on TRID
Recording and TRID: Impetus for change?
CFPB clarifies TRID examination policy
New Mexico bulletin clarifies escrow requirements, despite TRID
Ready or not, it’s here
House approves TRID bill, ignoring veto threat
For resources, special reports and more, visit the Road through Oct 3
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