TRID – Dust Won’t Settle Anytime Soon!
While TRID didn’t necessarily result in a ‘housing apocalypse’ as I jested it might in a blog piece posted in the fall of 2015, it does in fact continue to wreak havoc on mortgage bankers nationwide―havoc that won’t end any time soon.
Mortgage bankers have worked vigorously to cobble their people, process and technology together to ensure the forms and data would be correct in order to meet regulatory scrutiny. While there is room for error (as lenders only need to demonstrate a concerted effort to comply), the struggle continues. Lenders are challenged to overcome the operational impacts and impairments that have resulted in dramatically increased cost to produce.
CC Pace conducted a survey of a wide variety of lenders recently, and found that 2 out of 3 are struggling ‘significantly’ with meeting the new TRID regulation. Lenders indicated they have had to ‘throw bodies at it’, temporarily re-structuring processes and other facets of their organization to keep up with the workload. They’ve had to hammer their technology providers for immediate enhancements and implement additional manual steps and work arounds to ensure compliance. Yet despite these proactive steps, some lenders continue to conduct emergency meetings daily to put out the fires at hand in an effort to remain out of hot water with the CFPB while moving loans to close. Cost to produce has sky rocketed due to staff increases in closing and significantly increased tolerance cures, and customer service has been impacted, often with numerous days added to the closing process, negatively impacting lenders’ efficiency, productivity, profitability and reputation. As a result, recent headlines show several top banks and mortgage lenders are either getting out of the lending business or significantly reducing their appetite for production. This should be a clear and distinct message that the dust of TRID has far from settled.
Unfortunately, most mortgage bankers see no end in sight to their struggles. Many focused originally on getting documents correct but less so on their processes, and this is what is now driving their cost and customer service issues. A continued investment of time and energy is required as lenders to conduct on-going evaluations of their existing processes―knowing that any changes can send ripple effects throughout the end-to-end process. As a result, CC Pace recently launched a targeted service called ―TRID Rapid Relief―to help our customers cope.
In my blog post on October 8, 2015, The Value of Looking Back while Looking Ahead, I posted the question, “What’s next for lenders after TRID goes live?” The short answer turns out to be “clean up.” But once the aftermath of TRID gets laid to rest and the struggle subsides, what does come next?
During the last several years lenders nationwide have understandably put off large-scale projects due to TRID. It is now time for lenders to start reconsidering those large-scale projects in order to effectively reduce cost to produce, increase return on investment and position themselves to move forward successfully and profitably in the new age of mortgage banking.
Moving forward, it will be imperative that lenders start to take a long-term, strategic approach to their process, people and technology―a long-term strategic approach that will eliminate the rubber bands, glue, Band-Aids and manual steps they have come to rely upon. As technology, regulations and customer needs have evolved―and with the coming of the millennial home buyer and homeowner―lenders need to start re-thinking their long-term approach, recognizing that the technology and the process strategy they employed to get through the financial crisis may not be the scalable, long-term solution that will allow them to successfully grow as the housing markets continue to recover. CC Pace has been successfully orchestrating the design and implementation of large-scale, business transformation projects for mortgage bankers for over 35 years. We are currently in the final stages of helping implement a Business Transformation project for one of the nation’s largest and most respected regional banks. This has been one such transformative project, where fair lending and the customer experience has been at the forefront of the bank’s requirements. CC Pace facilitated the ground-breaking merger of the mortgage and home equity business units while helping move them onto a shared technology platform. While some industry colleagues have considered this concept “bleeding edge” and others say it’s “cutting edge”, most industry executives will recognize this as representing the new age of lending, one that truly represents fair lending at its best due to the bank’s ability to now offer all the home lending products a customer is qualified for at point of sale, Mortgage AND Home Equity products. Rather than the traditional approach of a loan originator only being able to represent and sell the home lending product their particular origination channel represents, Mortgage OR Home Equity loan products.
Executives are recognizing that in this new era of mortgage banking, walls need to be torn down and operational efficiencies gained throughout to drive the ultimate customer experience, while still mitigating risk across the board. Now more than ever, it is important for mortgage banking leaders to stop looking down and to start looking up―scanning the horizon and moving their organizations towards the future of mortgage banking. It’s time to start transitioning from survival to transformational.