Five months after the CFPB’s TRID rules went into effect, mortgage lenders across the country are still struggling with how to best manage the changes. Outside of the physical changes to the documents, the biggest impact has been in the waiting periods mandated for both the initial “good faith” estimates and the closing costs disclosures.
The rules are well known by now – a three-day requirement for all loan document disclosures and a seven day advanced notice for all material changes to the Loan Estimate. Closing delays due to disclosure errors can be extremely costly – impacting realtor relations and the ability of a homebuyer to move in and maybe even own the home if the rate locks and the deal falls through because of mistakes.
The most common solution to avoiding unnecessary delays? Moving the vast majority of disclosures to digital. While no concrete numbers have been officially tallied, in speaking with lenders and tech vendors nationwide, many lenders are pushing as many as 75% of their disclosures to an electronic channel.
Instant Delivery, Continuous “Paper” Trail
Why has TRID pushed lenders so quickly to adopt eSign with their disclosures?
The most important from a compliance standpoint is data integrity. Since an e-disclosure is accessible at every step of the mortgage process, changes made in the LOS are automatically applied to the documents. This eliminates any differences between the data in the system and the information on the documents, as well as eliminating redundant data entry and data errors.
eSigned disclosures also enable lenders to eliminate much of the manual effort of handling, processing, mailing and checking paper documents. By reducing the time spent on each loan disclosure package, lenders can focus on the customer and providing the best possible experience.
Electronic files also provide enhanced security not available in paper. Digital files are encrypted for secure transmission and storage, preventing unauthorized access to the data. An electronic “seal” can also prevent tampering, protecting the integrity of the information.
And finally, e-disclosures cost less. Integrating all the documents into one digital platform reduces the need for expensive transportation and storage services. Decreased time printing, shipping and filing means less money spent on each loan.
Consumers Embrace eSign for Disclosures
eSigning disclosures doesn’t just benefit the lender, either. Who hates delays to closing a loan more than lenders? The person buying their home!
Today’s home buyers demand convenience and tech-savvy options, whether it’s in their mobile banking application or being able to receive and sign their loan disclosures from the comfort of their living room.
And more than ever, consumers are comfortable using digital applications to manage major financial transactions. For example, in the banking world, the Federal Reserve reports that now half of all smartphone users utilize an online mobile banking application.
TRID has been a nightmare for some, but it doesn’t have to be. Ensure compliance, eliminate delays, and most importantly, provide a better home buying experience for your borrowers by moving to electronic disclosures.