TRID Coming Soon Your Way
TRID is coming to mortgage lending on Aug. 1, 2015.
In case you have not been paying attention to new aspects surrounding your typical measuring buildings and writing reports on a daily basis, TRID is set to become a major change in the mortgage lending process.
TRID is the acronym for the ‘Truth-in-Lending Act/RESPA Integrated Disclosure’ process that applies to every mortgage loan as of 8/01/15. It was part of the Dodd-Frank Law, with power given to the CFPB agency to devise the rules, forms and process. The intent is to consolidate and simplify processes that have been somewhat confusing to consumers under TILA & RESPA.
I hear you saying “so what!?”
Appraisers are involved with TRID because we normally quote our report fee and Due Date up front. That fee quote becomes part of the required Loan Estimate given to the borrower in advance of the actual signing of the loan application document. There is a mandatory 3 day waiting period to allow the borrower to review loan costs, etc.
If after you give the initial fee quote (such as auto-accepting assignments before doing property research) you discover challenging aspects of the property that justifies an increased fee, you need to contact your client immediately. The client (and lender) are required to start the Loan Estimate process all over. Remember that mortgage interest rate loan lock dates are normally quoted at the very early stage of the loan application process.
Your Due Date modification can also affect the loan lock if days between report submittal and closing date are too short.
So any change YOU make to your fee and Due Date after your initial quote can jeopardize the overall lending process.
The point here is this: research properties first before giving a fee quote or agreeing to a short Due Date. Don’t just “assume” the assignment will be for a run-of-the-mill property until you find out for sure what the property actually is, at least from available records you access before the actual inspection.
That’s in the ‘front end’ of TRID.
The ‘back end’ of this new process is the Closing Disclosure form. This Closing Disclosure form replaces the current HUD-1 form we are all use to. The Closing Disclosure form shows all costs related to the loan, who charged what, and who pays what at the time of loan closing.
Unfortunately, despite much lobbying by appraiser associations and letter writing by appraisers, the Closing Disclosure form will show only ONE FEE for the appraisal. It will not divide out the management fee paid to an AMC if an AMC is involved, and a separate amount paid to the appraiser. All appraisal costs will be lumped into one amount on the new Closing Disclosure form.
If you’ve read this far, there is something else to consider: Is your current minimum fee for service actually adequate? You may want to consider adjusting your fees now, so that when Aug. 1 rolls around, at least your new minimum fee for service will be reflected in assignment requests, especially those from AMC’s. Borrowers are already paying more for the lender’s quoted appraisal cost – so you might as well capture more of that increase.
Aug. 1, 2015. TRID. Appraisers are integral to the mortgage lending process and documentation time lines. Hope you will treat your responsibility seriously.