It’s already been seven months since the Truth-in-Lending/Real Estate Settlement Procedures Act Integrated Disclosures (TRID) went into effect. Many lenders were adequately prepared for the changes by integrating new technologies within their organizations. However, many lenders are still struggling to adjust to the “new normal” that is TRID compliance.
A common theme to the technology changes for many lenders who have successfully managed TRID is a focus on the seamless flow of data between the LOS, document management platforms and compliance systems.
But what makes secure and automated data sync important to TRID compliance and the new Loan Estimate? While the argument can be made that there are infinite reasons why accurate and easily accessible loan data is of the utmost importance, we’ve compiled the top five reasons why lenders must consider loan data integrity to successfully manage TRID compliance.
1. Ensure Accuracy Between Different Technology Tools
TRID documents are dynamic, meaning that as changes are made to the loan data, subsequent reactions occur in the document as a result.
Because of this, the data that lenders send and input will directly impact what portions of the document will or won’t appear as the loan process continues. Additionally, even something as simple as the date the disclosure is issued impacts the rest of the loan process, and having visibility to immediate data updates eliminates unnecessary delays.
2. Provide Audit Trail on Fees
Lenders need to have a clear and accurate data trail in order to show what changes were made to the initial charges and to accurately determine if a re-issued loan estimate is required.
When the regulators come to exam a lender, having a clear audit trail is vital to establish that all TRID estimate tolerances were followed. A lender with a secure, fully synchronized data environment between their LOS and document management system will be able to demonstrate any changes and the actions that resulted from those changes.
3. Validate Mandated Waiting Periods
Similar to the fee tolerance issues, an accurate data trail also helps the lender validate that it followed all of the mandatory waiting periods between disclosure delivery and consummation. Electronically delivered disclosures can automatically record in the database delivery confirmations, open dates and signature dates, triggering the necessary steps to closing and providing proof of compliance.
4. Accurately Show Calculations On the Form
Before a loan disclosure can even be issued, the lender has to be able to accurately calculate the estimated costs of the loan and the estimated costs for closing. While some estimates can come from the lender directly – APR, total payments and total interest paid – other costs – title fees and settlement costs for example – come from outside sources. Having a system that can communicate seamlessly with all the parties involved makes it easier and more accurate to collect the necessary estimates and instantly update all systems if changes are necessary.
5. Avoid Penalties for Non-Compliance
In the end, the automatic syncing of data between document management platforms, the LOS and settlement services serves to help avoid costly penalties for noncompliance. Lenders must have the right data to generate an accurate disclosure or risk potentially incurring a hefty fine from the CFPB for incomplete or inaccurate information.
While loan data will continue to play an important role all across today’s mortgage industry, lenders that consider these key points regarding the use of data for TRID compliance will greatly decrease the potential for operational and regulatory issues moving forward.