By Pat Carney
Under the TILA-RESPA Integrated Disclosure rule (TRID), there’s a 10 percent tolerance for shoppable fees, like title. Falling “out of tolerance” can result in monetary and reputational penalties for lender clients. So, how can title and settlement agents help their lender clients ensure their fee disclosures are within tolerance?
During the pre-TRID and the early post-TRID period, lenders relied on extra manpower for their fee disclosure process. They collected rates and fees manually, then kept them updated in archaic tables and templates. Some even resulted to calls and faxes (gasp!).
But now, with the CFPB calling on lenders to use “the best information reasonably available,” more and more lenders are moving to automation. They’re partnering with specialized providers that perform fee collection and management on their behalf. Ideally, these solutions can also be integrated with each lender’s LOS, so that the closing fees can be loaded into the LOS, and subsequently the Loan Estimate.
These closing cost fee solutions leverage rate and fee management engines that dynamically load closing costs for a given loan based on the type of loan, loan amount, and subject property address. When a provider changes a fee, which often occurs, the fees will be updated and verified in the fee management engine without lender involvement—improving speed and accuracy by eliminating errors that may result from re-keying, misreading fees in a look-up table, or using outdated information.
By leveraging an automated closing cost fee solution, title and settlement agents are able to market their rates and fees to lenders nationwide and in real time (and ultimately secure more orders). Meanwhile, lenders are able to ensure that the cost disclosed to their borrowers on a Loan Estimate or Good Faith Estimate is the same cost indicated on an order, and ultimately the same cost provided on the final Closing Disclosure at settlement—guaranteeing they stay in TRID compliance and don’t fall “out of tolerance.”
Pat Carney is Chief Innovation Officer at ClosingCorp. He can be reached at firstname.lastname@example.org. Carney will discuss this topic during a Market Talk (The Need to Deliver Accurate Fees) at ALTA’s Annual Convention. Click here to register.