Eight months into TRID, many challenges remain for closing attorneys and title companies - by Ken Foster

Ken Foster, Standard Solutions, Inc.

Eight months into TRID, many challenges remain. Closing attorneys and title companies are struggling to keep up with the additional work under the new rule. Procedures that used to be routine and automated now require judgment and manual intervention. Lenders all seem to want things done differently, and at least some of what is being demanded is incorrect. Attorneys have had to develop new forms and procedures to deal with the changes. Between the time it takes to figure everything out and all the back and forth with lenders, closings are taking much longer to prepare.

Mistakes, and things misinterpreted as mistakes, are impacting the secondary mortgage market as well. Investors are worried about purchasing loans with defects that may open them to liability under TILA, says the Association of Mortgage Investors.

Vagueness in the rule has left many open questions. Construction loans, for example, present problems under TRID. Attorneys we’ve spoken with are at a loss for how to make them fit into the forms. We are told the CFPB won’t answer questions, and insists everything is in the 1888 page rule.

Real estate broker commissions are another subject of concern. TRID requires the entire commission be disclosed in Section H, not just the portion the seller pays at closing. The sample forms disclose the commission in the Seller-Paid At Closing column, but this throws off the seller’s bottom line when the broker is being paid from the deposit. The rule offers no help in dealing with this conflict.

One option is to disclose the broker-held deposit in the Paid Before Closing column. This is not really accurate either, however, as the broker is not actually paid before closing. How else to handle this – a seller credit in Section M? So far, nobody is saying.

Contradictions and vague language have led to problems for the many software vendors dealing with TRID. A major LOS package was for a long time carrying the wrong number from Section J into Section K. This would throw off the totals and make it impossible for closing attorneys to match the lender’s CD.

There has been much confusion over recording fees. The rule allows additional lines to be added to Section E, but a vaguely worded official comment (that most people never saw) prohibits using them to list recording fees. Lots of software packages had this wrong at first, though most were eventually corrected.

Much was made of how the CFPB market tested the TRID forms with real consumers prior to finalizing the rule. It would have been good to do the same with people who actually work with the forms every day so that these kinds of issues could be dealt with up front.

When HUD rolled out the 2010 revision of the GFE and HUD-1, they followed up for months with hundreds of FAQs and answers. While there were issues, these helped the implementation go a lot more smoothly. The CFPB should be willing to do the same.

Because software vendors are a nexus for questions and concerns about the forms, we’re in a position to compile what answers we can. Based on research and feedback from the industry, Standard Solutions has developed our own FAQs, plus an annotated sample CD that references relevant aspects of the rule.

While many unanswered questions remain, much of what we are asked from day to day is actually covered in the CFPB’s guide to the TRID forms and in the supporting materials developed by the title underwriters. We encourage people to dig into this material. While you won’t find everything there, the knowledge in these resources will help ease the burden of compliance with this complex rule.

Ken Foster is senior client services specialist and staff attorney at Standard Solutions, Inc., Malden, Mass.