The TRID upheaval

The changes brought about by the 2015 arrival of the TILA/RESPA Integrated Disclosure Act – which implemented the use of the Loan Estimate and Closing Disclosure forms – have altered the dynamic between lenders and agents. One of the biggest changes is that lenders are now in charge of handling closing documents that were once the responsibility of agents.

A survey of lenders conducted in April by the National Association of Realtors found that 64.3 percent of lenders were unwilling to share closing documents with buyer’s agents, due at least in part to vague language that does not make it clear whether the agent has a right to review the document. However, the survey also revealed that the number of transactions delayed by TRID had fallen to just 1.7 percent in the second quarter.

Agents or lenders frustrated by the “vague language” around closing disclosures should take heart: in July, the CFPB proposed updates to TRID intending to clarify that language and other areas of the rules.

As a result of TRID’s implementation, lenders have to do their jobs faster, accomplishing what they need to do at a rate of about 25 percent faster than before, according to Kasprisin. Lenders must also make sure that they continue to meet client expectations. A 30-day close has essentially become a 23-day close, giving loan officers less margin for error.

Kasprisin finds agents overall are doing an “incredible” job of handling lending and keeping their clients informed. Unfortunately, the clients themselves may fail to follow instructions.

“Like a teacher, you cannot blame agents if the student does not learn what they taught them and fills out their paperwork incorrectly,” he says. “People want to get into the house of their dreams as quickly as possible, while agents and lenders are asking them to go find paperwork when they want to look for window treatments and new paint colors. What would you rather do if you were them?”

Safranski feels that the current closing documents serve to better outline deals’ true pricing. As a result, TRID has not affected the flow of deals for him. He notes that many lenders grasped the changes quickly, due to advance efforts in educating all parties on the requirements under the new rules. Agents, for their part, have also worked to get required documents ready as early as possible so that lenders have enough time to go through them and put their Closing Disclosure together on time.

“Last year, there were lenders who were panicked about what TRID would do to their workflow,” Safranski recalls. “But a lot of effort was put into getting everybody on the same page.”

He feels poor communication is as likely to cause problems as the regulations themselves. A loan officer may receive a last-minute document, which can create delays and headaches for everyone involed, for example. But that loan officer should have already communicated to the agent that some documentation is still outstanding, and that the closing could therefore be delayed. Certain last-minute additions, Kasprisin explains, raise red flags.

“Every loan officer knows that a bank statement that comes in at the eleventh hour is going to have you shaking your head and saying, ‘What do you mean your friend gave you $50,000?’” he says.

Communication and cooperation

Kasprisin also sees problems arising when lenders make too many promises. To mitigate that, he believes in delivering bad news as soon as possible, and in under-promising and over-delivering.
“If the loan officer thinks that a deal might get hung up, tell everyone involved that you have identified a problem as early as possible,” he says. “Obviously, you cannot give specific details because of privacy concerns, but you can give a heads-up of a general problem.”

Kasprisin recommends lenders reassure their clients that they have the tools at hand to potentially solve the problem, as well as to project a calm demeanor and maintain a steady hand when it comes to navigating obstacles.

“Do not get people worked up, but let them know that you are facing some challenges,” he says. “And as the solution unfolds, pass that information along. It builds confidence and creates trust. Those are critical attributes in a successful loan officer and agent relationship.”

Like Slater, Vlamis sends out an email early in the process to all parties involved. He wants all parties to know what’s happening — and going to happen — during the process. He also feels it is important to get in touch with a client the minute something goes wrong.

“If there’s a problem, there’s a phone call going out right away,” Vlamis assures. “If I have to get yelled at, I can take that and then I can explain to them everything that they need to know right away.”

Problem solving, setting expectations and organization are key aspects of any partnership. But industry knowledge is also important, and having access to real estate professionals whose judgment and expertise can always be trusted is irreplaceable.