The Real Estate industry had been bracing for the implementation of TRID – the new online compliance portion of any conventional mortgage loan transaction – that many industry insiders believed would be the death knell for all transactions by threatening to extend the already lengthy home purchase process.
The reality is that TRID, or Truth-in-Lending Act/ Respa Integrated Disclosure, has not had that effect. In practice, it is helping to streamline the process.
TRID, which went into effect on October 3, 2015, was implemented to improve loan disclosures to consumers. It ushered-in timing requirements for disclosures that lenders must make to consumers and also created the necessity for online consent or E-Consent of loan documentation, loan estimates, and Closing Disclosures. The borrower acknowledges consent to receive documents electronically, and then automatically receives updates after certain milestones are met throughout the loan process. This also creates the ability for the borrower to acknowledge changes in the documentation in a timely manner. This process is the same for a borrower who is purchasing in their own name or in the name of an LLC, and applies to all conventional loans.
It is the ability to E-certify changes that is actually speeding up the process. For instance, in the past if a borrower changed the loan amount, that would set off a multi-day process of re-disclosures requiring the receipt of new paperwork, signing of that paperwork, and returning it to the proper departments where it had to be integrated into the loan. With E-Certify the borrower signs in, reviews, and accepts the change within a few minutes.
The VITAL piece of this new system is to accept E-Consent at the very beginning of the loan process. If a borrower choses to refuse E-Consent (or is unable to accept E-Consent), they will be held to the paper disclosures throughout the entire transaction. You cannot start out one way and finish another.
This movement to online acknowledgement is part of the Dodd-Frank Act that was set in motion in 2010 to bring accountability and transparency to the banking industry.
Chad Vanderslice has been in the residential mortgage lending business for over ten years and is currently a senior loan originator at Everbank.