APRIL MARKS THE HALF-YEAR POINT since the implementation of the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure rule (TRID). The landscape of mortgage origination has been transformed, and the challenge of sweeping changes in processes and technology required to meet regulatory requirements generally has been met.
Post-TRID mortgage loan originations are fully underway, and the Consumer Financial Protection Bureau (CFPB) is preparing to assess compliance with the rule. But how can lenders know what to expect if the CFPB calls for an exam?
TRID is intricate, so assessing adherence will be multifaceted and complex. Yet apart from the guidance provided by the CFPB Supervision and Examination Manual for the TRID rule, there is little empirical knowledge of what lenders should expect during an exam.
In other words, until the CFPB actually begins conducting TRID exams, it's hard to say how they will play out. Hence, preparing for examiners will be as much art as science. How, then, can you be ready if the CFPB calls?
The art: Discerning what to expect
Regardless of limited guidance and TRID exam experience, lenders will have to demonstrate compliance with the rule. An analysis of the requirements of the rule and the exam manual leads us to expect lenders to be held to the following (inexhaustive) list of standards:
* Accuracy and timeliness in application data capture and preparation and issuance of mortgage loan disclosure documents;
* Clear and consistent pricing, credit reporting, rate locks and pre-approvals;
* Robust document verification and management and third-party services oversight management;
* Enhanced features that account for manual and automated underwriting, risk assessments, validation of conditions and loan approval processes;
* Appropriate consideration of multiple fee disclosures, supported by valid and evidenced fee-change justifications;
* Real-time monitoring and oversight capability for origination workflow that enables actions to prevent bottlenecks, and provide oversight of in-process origination files;
* Ability to facilitate closing and funding activities, including loan accounting and third-party reviews of pre- and post-closing origination files;
* Detail and precision in determining lender tolerance cures and demonstrating loan remediation analytics; and
* Validation and proof of compliant loan origination processes and results to loan purchasers.
The science: Random...