Here we are at the end of another year in the Three Ringed Circus we call the Mortgage Industry. And, boy, what a ride it was through 2015. I think most of us on the front lines can safely say this year was a doozy. A telling survey would show how many of us are left standing, how many chose to walk away, and, more poignantly, how many of us are on our knees in begging for submission.
If we take a brief walk back on memory lane since the financial meltdown back in 2007/2008 that caused untold billions of dollars in fallout, and bankrupt a few small countries, we’d see a myriad of compliance and regulatory changes implemented by the government, Dodd Frank, and our beloved CFPB that have dramatically changed the way our business is conducted.
The 2010 Good Faith Estimate/HUD was one of the first significant changes to affect the industry that we initially thought complicated matters as we were required to include the sellers fees on the buyers estimate. However, it was still a document that could be easily explained, and we could accompany it with a fees worksheet that specifically highlighted the buyer’s actual costs. Of course, it was designed without a signature line, which caused the requirement of an additional disclosure stating the intent of the borrower to proceed with the transaction. Our usual government streamlining at work there!
Later we saw the Real Estate Settlement Procedures Act (RESPA)three day disclosure time frames steadfastly implemented, particularly on refinances, regardless of whether we had enough information to proceed, or we’re required to cancel out the file and start over. There are a magic six items of information that trigger the need to disclose, which for a purchase loan would usually prohibit disclosure due to lack of an address. But, specifically on refinances, we may not have the client’s preferred loan type, loan amount, income, or assets, but we’re bound to send out documentation reflecting something anyway. Not remotely a waste of everybody’s time, or misleading to the consumer if we inaccurately disclose, for sake of disclosing, something within the three day time frame.
Let’s not forget the compensation law changes that now prevent us from assisting our clients by crediting towards their closing costs from our commission, which has essentially protected Loan Officer income at the expense of our clients, and of course also enabled the broker/banker world to be radically redefined with how this compensation is disclosed to the client. Inevitably the banks “won” as their employees can “hide” the real income earned by the Loan Officer, where brokers had to disclose every penny of theirs. Discriminatory, and misinformed to say the least.
But, most of all, just when we all had it dialed in, knew exactly what we were doing, were educating our clients, and guiding them through a fairly straightforward process, we were hit smack in the forehead with T.R.I.D (see previous article). To say this was promoted to be a more effective way to disclose accurate closing costs and buyer’s fees, couldn’t have been further from the truth. Aside from the inherently awkward and frustrating technology standpoint, requiring multiple systems to interface in order to enable said accuracy, there was the premise that we would have totally precise fees in place at the inception of the transaction. Instead it now requires multiple re-disclosures throughout the transaction that not only confuse the clients, but become so cumbersome to constantly have to acknowledge for fear of delaying anything by another three days, that inevitably the clients switch off, and mechanically go through the motions searching desperately for a closing date.
How could we have endured so much and yet have traveled so little? It’s like being trapped in a persistently circling vortex with no end in sight, and little chance to step off. Files have literally ceased to move forward unless one is willing to resort to the constant badgering of every person involved, most of all the poor clients.
So, where does that leave us? I think most of us are left wondering, as none of us are completely sure of what it is we’re trying to achieve, the investors backing said loans have no idea what they really want to see in the file, and the satisfaction and pleasure that accompanied the closing of your first time buyer and their new dream home has been quashed, stamped upon, and left wanting with only the feeling of having endured five championship rounds with Conor McGregor.
Don’t you feel proud of yourselves? You made it through one heck of a momentous time in lending history, and you’re still here at the end of 2015, TRID and all! Congratulations, and here’s to a fantastic New Year. We’ll be back, stronger, and more resilient than ever, so bring it on!!
HAPPY NEW YEAR TO ALL!!
Suzanna Ravin has been working in the lending industry for the last twelve years, currently managing a retail branch Peak Mortgage, a division of Finance of America Mortgage, LLC. She maintains her top originator status by remaining very hands-on with her clients’ transactions. Often referred to as the Loan Guru, she loves to be completely informed on lending guidelines, and regulations.