Mortgage servicing and loan origination systems can assist clients by incorporating TRID (TILA-RESPA Integrated Disclosures) for originating, processing, and closing loans.
What is TILA RESPA Integrated Disclosure (TRID)?
TILA (Truth in Lending Act, 1968) and RESPA (Real Estate Settlement Procedures Act, 1974) have been integrated to help consumers understand the risks, costs and other details in real estate transactions implemented by the CFPB (Consumer Finance Protection Bureau).
TRID compliance is deeply important for customers, but can be quite challenging and complicated for lenders. Nevertheless, it is absolutely achievable by using appropriate mortgage resources and updating existing software. With the help of TRID-compliant software, mortgage lending becomes simplified, as it automates some of the key processes. Those processes are:
Tracking the level of tolerance: There are categories of tolerance thresholds that stop the rise of certain types of fees. They range from the total amount announced on the estimated loan to the amount actually charged while closing the deal. There are new mortgage software solutions that help prevent errors by automatically recognizing the category that such fees actually belong to. The calculation is about applicable tolerances, seen as fees that are changed by the user, and by warning the user when moving beyond a set threshold.
Management of timing requirement: There are software systems that make event tracking simpler. They calculate the earliest possible dates when creditors can collect fees, dates to be assigned for disclosures, and the probable dates for permissible closing. Hence, describing the business expectations to the customers, closing agents, brokers, and partners in a setup like real estate becomes easy.
Processes involving closing disclosure: The TRID-compliant software can automatically transfer the recorded fees to the loan estimation screen, followed by the Closing Disclosure. This reduces the time for data entry and other possibilities of errors in data inputs. The system automatically understands if the case will require a three-day waiting time for changes before closure. It can also identify when disclosures should happen.
How TRID can be effective for consumers
By using very clear language, TRID promises to eliminate extensive paper work that consumers have to go through. That will help customers better understand the complexities of the mortgage loan system. Right now, there are four forms of TRID, which are going to reduce further down to two on August 1, 2015. These forms are going to highlight information indicated by consumers to be the most important. These include total cost of closing, monthly payment, and interest rate.
TRID will provide better information on tax cost, insurance, and how payments and interest rates may change. As for the estimates consumers receive for loan-closing services, TRID adds reliability. It will also require mortgage lenders to provide the Closing Disclosure 72 business hours before mortgage loans are closed.
How TRID affects realtors
TRID disclosures affect realtors acutely, because the new time-bound requirements for the delivery of Closing Disclosures are extremely stringent. Closing Disclosures must reach customers at least 72 business hours before signing is closed. If there are a few changes required in the loan file re-disclosure and the customer has a minimum of 3-day waiting for a loan product, it changes the addition of pre-payment penalties and the annual percentage rate.
Loan tracking software can help lenders create easy and fast reports that show the status of billing and other updates, in the construction for which a mortgage has been availed.
Preethi vagadia is a business architect worked in Mortgage and Finance software department with top notch companies and has over 8 years of experience in Mortgage Lending Technology,mortgage processing software,mortgage management software etc. She has also worked in several process improvement projects involving multi-national teams for global customers in warranty management and mortgage.