In November 2013, the Consumer Financial Protection Bureau (CFPB) integrated the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures and regulations. The new TILA-RESPA integrated disclosures (TRID) took effect in October 2015.
According to a survey of bankers conducted by the American Bankers Association (ABA), TRID has led to delays in loan closings due to longer processing times, as well as fewer product offerings. The survey had 548 banker participants, 62 percent of whom work at banks with an asset size of $500 million or less.
In terms of processing times, the survey found that:
- More than three-quarters of bankers reported that they have experienced delays in loan closings
- On average, bankers reported a loan closing delay of eight days
- More than 90 percent of bankers noted an increase in front-boarding and loan processing times
TRID has also impacted banks’ ability to offer products to borrowers. According to the survey, approximately 25 percent of respondents have eliminated certain mortgage products due to TRID.
Bankers also indicated that TRID has added costs and hampered productivity:
- Approximately 50 percent of respondents have hired additional staff to deal with TRID compliance, or plan to do so
- Nearly half of bankers noted that they have had to make more than 10 upgrades to their loan origination software since October
- More than 70 percent said they are still waiting on updates from their software vendor, and more than 80 percent are using manual workarounds due to software problems
ABA executive vice president Bob Davis commented on the survey results: “It’s clear from this survey and our discussion with bankers that TRID compliance remains a significant concern. Consumers are seeing the greatest impact due to increased loan costs, fewer choices and delayed closings - and that’s not what this rule was intended to do.”
Many of the challenges that TRID has posed are due to ambiguity and uncertainty regarding implementation of the rules.
While CFPB has attempted to provide implementation guidance, banks are understandably concerned considering the possibility of liability for violations of TRID rules.