Jun 10, 2015, 11:00 ET
BELLEVUE, Wash., June 10, 2015 /PRNewswire/ -- NexTitle, a full-service title and escrow firm based in Bellevue, today released tips for companies to use in preparation for the upcoming Consumer Financial Protection Bureau (CFPB) TILA-RESPA Integration Disclosure (TRID) changes, which take affect August 1, 2015.
In November of 2013, the CFPB released a 1,888-page rule comprised of detailed regulations that will shift compliance liability to the mortgage lending community. Lenders in turn are expected to drastically alter their relationships with title and settlement agents, escrow agents, real estate agents, and other industry participants in order to insure their ability to comply. As the deadline for implementation looms, many lenders are scrambling to communicate and implement new processes, work flows and software with their partners.
According to a recent study from Capsilon Corporation, more than 40 percent of mortgage lenders aren't prepared to meet the CFPB TRID implementation deadline. However, an additional survey conducted by the American Land Title Association concluded that 92 percent of the title agents, underwriters, real estate attorneys and abstracters are ready to showcase compatibility. With the title and escrow industry at the forefront of implementation, they are in the position to share a wealth of knowledge with the rest of the real estate community on how best to comply.
The industry breathed a collective sigh of relief when the CFPB announced last week that there will be an open-ended grace period which will protect institutions acting in good faith. "Essentially if an institution is working in all good faith to implement the rule, the regulatory framework in this country will use what they can to provide instructive guidance during this delay period," said David Stevens, chairman and CEO of the Mortgage Banking Association. "This is a vast system of integrated service providers that spreads far beyond just lenders – there are servicing companies, real estate companies and third-party vendors who all have to make sure their systems are compliant and coordinated with each other."
"Many lenders feel ill prepared for these changes due to incompatible technology, which will be required of them in order to handle the TRID rules," said Jason Vander Vlies, CTO of Realty in Motion, an affiliate of NexTitle. "The new rules will force the mortgage industry to take responsibility of items they have never previously handled, such as CDF preparation, and will therefore be reliant on partners to provide compatible support."
In preparation for the upcoming changes, NexTitle has compiled tips for lenders to help alleviate potential pain points during the transition:
- Closings – Lenders must now provide the new Loan Estimate within three days of accepting a loan application and the new Closing Disclosure Form must be delivered to a buyer/borrower three days prior to closing. Since lenders have always relied on title companies to draft this document, there is a large potential for lengthy delays at the closing table. The National Association of Realtors (NAR) is advising its agents that transactions will be delayed an average of 10-15 days. Lenders will need to work closely with title companies, specifically those that understand the new rules and have advanced software to support the system. Now is the time to talk with settlement providers and determine if they are prepared to work via an online collaboration portal. If so, what software are they using and which ones do they have some expertise with. This will help alleviate challenges that may arise during the closing process and ensure timely and sufficient turnaround.
Tip: The three-day rule change could result in costly delays to a closing. Work with closing
agents to determine their readiness and alleviate potential closing mishaps.
- Evaluate Vendors – With the shifting of liability to the Lender, it's more important than ever to ensure that your vendors take compliance as seriously as you do. Your Title Insurance provider should be able to demonstrate that they and the third-party vendors they work with are acting in accordance to CFPB's new rules. When selecting a title company, request a copy of their ALTA Best Practices Certification. This certifies that the title company you have chosen has implemented the policies and procedures the industry exercises to protect lenders and consumers, while ensuring a positive and compliant real estate settlement experience.
Tip: Vendors are an extension of your company. Check their backgrounds to ensure there are no hiccups.
- Training – Employee readiness is key. A general orientation class for the entire staff will ensure a basic understanding of the upcoming changes but for those working on the front lines, or those dealing directly with consumers; they will need intensive training on the new rule and the new software. Start talking to your staff now and reinforce training early and often.
Tip: Prepare employees for upcoming changes, or they will not be able to comply.
- Software Updates – A large component of a successful transition on August 1st relies on software compatibility. The software providers have to revise their current software in order to create the new forms. Many are seizing the opportunity to create new online collaboration portals that will allow lenders and closing agents to work on the same form in real time. The providers of the industry's closing software are scrambling to get their products updated in time to meet deadlines while being forced to wait on the development of certain features from the online collaboration software providers. Decide which software solution you will implement and talk with your settlement services provider to ensure that they will be able to work within that system. It is pivotal to test new systems prior to the implementation date.
Tip: Don't let software updates slow you down. Update and test now or deal with the headache later.
"The upcoming changes will disrupt the way the real estate industry works together," said Vander Vlies. "Title and escrow firms, lenders and real estate agents need to band together to work out an efficient system so operations can run smoothly on all ends."
For more information on how best to prepare visit CFPB's website containing TRID compliance resources and information.
NexTitle is a national full-service title and escrow company passionate about partnering with agents and lenders and providing an exceptional closing experience. Our team includes professionals from all sectors of the real estate industry who strive to help clients adapt to the constantly changing requirements of the business. NexTitle is committed to providing clients the personal attention they deserve while utilizing proprietary NEXT-generation title and escrow tools that provide quick turn-times, communication tools and systems integration that are setting a new industry standard.
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