The Nightmare Continues – TRID

12/22/2015
once upon atime large

Once upon a time, Mr. and Mrs. Homebuyer went to their trusted Loan Consultant to be preapproved for a new home purchase. They knew their Loan Consultant, Jane, very well, and had worked with her the past a couple of times. She had always done her very best to ensure they were properly qualified, their loan terms were as promised, and she kept them informed throughout each step of the process. In fact, they liked her work ethic so much that they had also been comfortable in referring her to their family, and friends.

Jane evaluated all their documentation and gave them information on a couple of different products that suited their goals. They left her office and began in earnest to look for their new dream home. It was only a week or so later when they found that perfect property, and along with the letter Jane sent over for them, they submitted an offer. It must have been that the stars were aligned that day as their offer was accepted, and they were moving forward towards their new dream home purchase.

Imagine at this point how wonderful they felt when Jane sat them down again and explained the new guidelines that had been introduced called TRID that required certain rules to be adhered to, and certain waiting periods to be implemented during the process that would inevitably slow down the buying process. But, that this was in their best interests as they would have more time to digest the information overload during the buying process, and underwriting of their loan.

Satisfied that Jane had always been so quick and thorough in the past, they left the office and began the task of gathering the rest of the documents she needed in order to expedite the loan to underwriting. Meanwhile, Jane was requesting the fees from the escrow/title company, for the appraisal, the HOA, and from her lender. She received the fee sheet completed from escrow/title, and inputted all the data into her Loan Estimate, the wonderful new disclosure that had recently replaced the old Good Faith Estimate. Once complete she dutifully emailed out a secure set of Initial Disclosures for Mr. and Mrs. Homebuyer to sign and acknowledge.

The loan was submitted to underwriting, approved, conditions were received and signed off, the appraisal was ordered and completed, the loan was locked in, and everything was running along very smoothly. When it came time to issue the Initial Closing Disclosure, fees were requested once more from escrow/title, and it was discovered that they had errored in the original quote for their escrow fee, and missed another fee off entirely. This was simple human error, not malicious intent to bait and switch the fees, and the difference was negligible in the grand scheme of things. In fact, the large lender credit that Jane had secured for Mr. and Mrs. Homebuyer with the locked in rate more than covered any additional sum of money.

Imagine the absolute horror, and heart rending disappointment that Mr. and Mrs. Homebuyer felt when they were told that due to the fact there are no allowances for errors for these particular fees to be changed at this stage in the process, they had to stop the transaction, close it out, and the start all over from scratch with new initial disclosures! By this time they had given notice at their current residence, and were avidly packing their belongings in anticipation of moving in about 10 days.

The seller was livid, the agents were incredulous, and the buyers were devastated. Subsequently the seller decided not to extend the contract past the original close of escrow date, even though it was their choice of title/escrow company who had made the unfortunate error that caused the transaction to fail. Mr. and Mrs. Homebuyer lost their dream home, and are now avidly searching for another rental property to move into as they are officially homeless given that their current landlord has already re-rented to new tenants.

This sounds incredible, but it really is exactly how this new process could play out, and has done so I hear from numerous sources. And, this is but one unfortunate scenario among a multitude of possibilities than can cause a hard stop, and a complete re-origination of the loan transaction.

Please tell me, how is this in the borrowers’ best interests? In any way, shape or form, how can this truly be ensuring they are fully informed and therefore making educated decisions on their new purchase if there is zero margin for human error, and none of their informed choices make any difference? Where on Earth were the educated, and informed consultants used to assist in the development of the TRID guidelines that brought us to this? The new Loan Estimate and Closing Disclosure held so much promise of better times, and easier comprehension of mortgage fees and closing costs. It has to be said that these once promising forms have become part of an epic failure.


Ravin_1675fcropped for internetSuzanna 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.

You can reach Suzanna at sravin@peakmtg.com – 916-462-8811- www.peakmtg.com/suzannaravin or visit her Facebook Business Page

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12 thoughts on “The Nightmare Continues – TRID”

  1. G-II Varrato II says:

    Good day Suzanna,

    I am G-II Varrato II. My wife and I have been REALTORS® for the better part of 3 decades. I am also the Arizona State Director for VAREP (Veterans Association of Real Estate Professionals) and the Director of Government Affairs for the Phoenix Chapter of VAREP.

    I spend a lot of time in Washington DC, meeting with federal regulators and members of congress, to advance the benefits of veterans. I also know, personally, some of the folks who had a hand in crafting the CFPB TRID rules. I can assure you that many, if not most of them, have an extensive background in real estate and mortgage lending, in as much as they have actually worked in those respective industries.

    I read your article and have a few questions.

    I fully understand the argument made regarding ‘innocent’ errors made by the hypothetical title company in your article. And, while I can appreciate the human element of ‘fallibility’ I wonder if there isn’t a need to set the bar, just a bit higher, in the mortgage fee vetting process thus… to expect a near flawless performance by all who touch and interact with the generation and disclosure of loan fees?

    Consider the astronaut who sits inside a rocket, which is literally a bomb, to be launched into orbit. He has to rely on and expect that all of the players who had a hand in building the launch vehicle were 110% on their game when the rocket was built. If any one of them ‘error’, he doesn’t get a ‘do over’. Just ask the Challenger crew.

    Or consider the Formula 1 race car driver, who races through the streets of Milan. He must rely on his skills and believe that his team put him in the safest vehicle possible so he can win the race. Consider Michele Alboreto who lost his live at the Euro Speedway Lausitz speed way when one of his tires failed, his car went airborne, somersaulted, and the roll bar collapsed and crushed him to death. The tire manufacturer and the welder of the roll bar both were complicate in that death in that the efforts they put into the manufacture of their products was not 110%.

    Is it not then reasonable for a home buyer, who is making what could be the most expensive investment in their financial lives, to expect the same level of excellence from their loan/title/REALTOR team? And… if any of the players, who are advocates of the buyer/consumer, fall short of that 110% goal… be held responsible and accountable for that human fallible event?

    My wife and I have been REALTORs® for the better part of three decades. Like you, we have, way more than once, written a check for our client as a result of an honest error that we had a hand in. In fact, we… as I would bet… like you… have even gone the rout of writing a check for our clients, to make them whole or to ensure their real estate transaction closes, when the error was not our own error and yet, the right thing to do was to advance the goal of our client and get them into their new home.

    In the scenario you painted in your story, why would it not be logical for the party or parties, who errored, to step to the plate and simply ‘write that check’?

    There is no need to ‘reset’ the transaction if the custodians of the error stepped to the plate and had the back of the consumer. Is it not logical to believe that such an action, on the part of the party who errored, would also help that party focus more intently on elevating their level of expertise?

    When the LE is presented, it is expected that the figures are at a minimum accurate on the higher side of reality. The LE was created as a tool to help consumers understand all of the fees associated with their purchase. Not only the fees they can shop for but also the fees that are, by design, non-negotiable. Why then would it not be logical for a buyer to expect the figures presented to him/her… be a correct representation of his/her costs?

    I fully understand the inconvenience of a ‘reset’ and ‘re-disclosure’. However, such an event, in nearly every instance, would not be due to an error by the buyer/borrower but rather some other outside force, thus the need to ‘reset’ and/or ‘re-disclose’ could be eliminated if the party who errored, simply made things right for all parties. Oh yes… that can be very painful and expensive. But… isn’t it reasonable to believe that ‘expensive and painful’ lessons are the best teachers? We have reviewed dozens of CD wherein the lender ‘wrote a check’ to cover a ‘fee disclosure error’ rather than put the transaction in jeopardy by demanding a ‘reset’ and ‘re-disclosure’ period.

    I truly enjoyed your scenario. I simply have a different take on how the end of the tail might go if the party who got tangled in the pit-fall of ‘human fallibility’ owned the responsibility for such a short coming and made things right for the buyers and seller.

    Very Respectfully

    G-II Varrato II
    RET USAF 820th CES RED Horse, Life Time Member “River Rats”, REALTOR®, Arizona State Director & Phoenix Chapter Director Government Affairs VAREP

    1. LO from Boston says:

      It’s fine to say we should hold the bar higher and place more emphasis on accuracy, but c’mon … being off by a few dollars on a loan transaction is not as grave as your life and death examples. There ought to be a reasonable middle ground here. Yes, the borrower has put their trust in us to get it right — and we should, but no one is going to *DIE* if we have to redisclose a correction on some fees. (BTW, we get around this particular problem by insisting that all of our title agents agree to the same fees up front and that’s what we quote.)

    2. Michael Golieb says:

      I agree that we should all strive for 100% accuracy. However, if the government is not going to allow for even the most insignificant error to be corrected on the fly without forcing a complete stop and restart, then the culprit MUST be the one held accountable. As so many are fond of saying, they must have skin in the game. The only way that title company will be forced to focus on double and triple checking the figures before they go out is to hold them financially responsible, not only for the error, but for the consequences to all parties. Similarly, if the lender or their underwriter makes the error or misses a deadline, they MUST be held financially responsible. The way it stands today, the one left holding the bag is the buyer and seller whose deal gets delayed or cancelled.

  2. ml-oh says:

    We avoid that issue by disclosing the fees of another title company initially on the LE and list of providers and not listing not listing the actual title company used. Then during then loan process I update the title fees so the cash to close is more accurate. That way no tolerance to respect because a different title is used. I wonder if you work at a correspondent lender where their corporate policies do not allow you to do what I stated here even though it is still acceptable and functions well achieve all objectives of being compliant and not have to open a new app if title fees change.

  3. FL-MTG-BRKR says:

    I believe that title companies need to be held to the strict standards that LO’s are held to. My grip is just exactly what the article implies, once I get the list of fees from the title company, they should be bound to those fees. The problem is, once I disclose to the borrower all the fees, and a 3rd party (title company) increases or adds a fee, I’m the one that’s held responsible…

  4. Tom Peta says:

    TRID Just another example of “its not broken so lets fix it”. We used a 1 page GFE that Loan Officer and Buyers both signed for 50 years. Then we went to a 3 page GFE that nobody signed but gave a 10% adjustment window. Now we have no window. Looking forward to retiring real soon.

  5. Suzanna says:

    You know, I often wrote checks, almost on every transaction, and it was rarely because of anything I had done wrong. Fees appeared, borrowers didn’t have money to close, I always stepped in and I always gave my money to help them out. I’m not allowed to do that anymore, they made it illegal a few years ago. The concept of me not being allowed to rectify small errors that are made is beyond me. I’m quite happy to step to the plate and do whatever it takes to make the transaction work. I don’t understand if I’m paying all of the closing costs anyway through a lender credit why we should have to stop an entire transaction and start over from the beginning because of one small human error. That’s my point.
    Of course in a perfect world everything would be 100% accurate from the start. But there’s so much that is unknown when we are required by Respa to quote those fees. We rarely know how much condo fees are going to be for the certification, a copy of the master insurance policy, how much it will be to transfer the HOA documents, etc. We are expected to gather these fees within a three business day timeframe from receiving the contract.
    I come across more realtors who have no idea how much the HOA fee even costs every month, regardless of how we get the condo documentation, from whom, or how much it will cost. You may vet your listings every single time so that you are aware of all of these individual charges to pass along to us when we request them. But I can tell you its very rare we can find that information out within a three day timeframe.
    We are put under an incredible amount of pressure to get that file disclosed accurately from day one. If everyone in the transaction was more accountable, and that includes the realtors who are listing these properties too, then we may have an easier time of it. But, putting all of that responsibility on us to gather fees that should really already be known and also very standard, is absolutely unbelievable. It’s often impossible to get a realtor to answer their phone and respond within a couple of days. That’s two days out of our three days gone before we even start finding out where we go to get the information.
    Too many humans involved in a transaction to ensure that we are able to perform under these constraints. But it really is only the loan officer that has to perform and when things do go wrong, it’s only the loan officer that everyone blames.

  6. Marty Prince says:

    I agree with ML-OH. The correct use of the service provider list, and disclosing fees that are from other than the escrow and title company chosen by the seller and buyer, avoid all these difficulties.

  7. You can spin this any way you want, but I have been in the business since 1981 and this is not an improvement to the process. When the government steps in to "help" it costs the borrowers and everyone in the transaction more money and time.

  8. G-II Varrato II says:

    Ok… time to put this discussion into perspective.

    Remember, the LE is a Loan Disclosure. We all know this. We also know that the LE could, if necessary, be altered with zero impact to timelines any number of times so as to provide the buyer with a clear understanding of the costs to close his/her real estate transaction. We also know that, while it is incumbent upon the LO to deliver the LE within three days of receiving the buyers agreed upon contract, the buyer does not need to accept the LE upon presentation. The buyer has 10 days to review and/or shop the figures. This is where the buyer’s REALTOR and perhaps the LO become an invaluable part of the buyer’s education process. If the LE was presented with missing HOA or Title fees, that would be something that the buyer would want to be made aware of.

    For example, section “H” of the LE might be missing an accurate disclosure of the HOA and/or Title fees.

    Do we all agree that the buyer is entitled to know what those fees are? Do we also agree that the HOA and Title companies should be held accountable for accurate disclosure of those fees? There is little need to ‘re-disclose’ anything at this point. If the LE is sent to the buyer with incorrect information, and then later updated with a greater fee structure, prior to CD disclosure, the buyer could be disappointed and perhaps angry, however the transaction is not in jeopardy of a ‘reset’ at that point.

    Bottom line… let’s not confuse the LE requirements and the CD requirements.

    Yes, it may seem a bit daunting that the LE has a 3 day ‘got-a deliver’ tail on it. However, is it not logical to believe that the real estate representing the buyer and for that matter the seller also have a responsibility to their perspective clients to help them secure the best and most accurate information as possible?

    I agree with you Suzanna, everyone, title, HOAs and real estate agents have a dog in this fight and they should all be held accountable.

    Merry Christmas to all and to all a Good TRID Christmas.

    Very Respectfully

    G-II Varrato II
    RET USAF 820th CES RED Horse, REALTOR®, Arizona State Director and Phoenix Chapter Director Government Affairs VAREP

    1. loansumlou says:

      I have to agree with a couple of folks who have commented on your remarks. Getting things correct 100% of the time is neither realistic or possible. with the human element involved.

      I, too have been in the busines for well over 30 years. During that peiod of time I’ve seen many changess in both the real estate and mortgage documentation. Rarely has it been an improvement.

      With that said, I agree with the fed’s premise that a buyer should see the amount of mooney he or she has to bring to the table sooner than at the closing itself. 3 days is a bit ridiculous but so be it. If there is a change that needs to be made, it’s an honest mistake and it affects the buyers, it should be corrected and redisclosed.

      However, if one of the Realtors or the lender is willing to pay for that error there should be no reason to have a 3 day period for the redisclose since at this point it has zero affect on the borrower. Modify the LE and get to settlement. This is simply the CFPB trying to make a name for itself! It’s all done for the children……I mean borrower.

  9. Dpinheiro says:

    Seriously! Comparing a LE to an astronaut in space or a speedway race where an error could result in death? I don’t think anyone will die if a fee has to be changed. We have a “Realtor Due Deligence” form that is sent on every transaction asking for HOA fees, etc. I always send to both listing and selling agent. I then have to submit a “Loan Officer’s Due Deligence” form. My company will not send out the LE without it. We all do our best to get it right the first time. Our paychecks depend on loans closing, but to error is human.

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