Remaining compliant can be a costly expense, especially with the onset of the TILA-RESPA Integrated Disclosure (TRID). With an estimated two-thirds of lenders hiring additional in-house compliance staff or third-party compliance firms to comply with new regulations, the cost is only rising. The Mortgage Bankers Association reported that the total expenses of loan production increased to $7,000 per loan in the fourth quarter of 2014. By way of comparison, it cost less than half of that in 2012. While compliance is a necessary component, rising costs can be partially alleviated by a proper implementation strategy and a thorough understanding of TRID.
Obviously, there are many areas to sharpen in preparation for the TILA-RESPA Integrated Disclosure. It is a mammoth 1,888 page regulation that affects every business functioning in the single-family mortgage market. Between proper technology vendors, operational impacts and compliance workflows, lenders cannot be “too prepared.” The mortgage industry is learning quickly how complex and confusing the new requirements are. In order to assist you in focusing on necessary preparation tasks, here are two more tips from our new eBook, “Are You Ready? 5 Ways to Prepare for ‘Know Before You Owe’.”
3. Develop plans for implementation
Implementation planning should be based on a gap analysis that reveals what processes need to change as a result of the new rules. The plan developed based on that analysis should identify who will be responsible for its development, who will ensure adherence and who will monitor compliance going forward.
As with any planning process, this one should involve all the impacted stakeholders and gain the approval of senior management. Progress tracking and reporting should also be included, as well as testing procedures and reporting of results.
Again, plans need to be shared with third-party providers, who should be willing to provide versions of their own planning. If that can’t happen, contingencies should be considered.
4. Train staff
A major component of any implementation plan is staff training. In this particular case, loan originators are seeing a three-page form that they only recently learned how to explain be replaced by a new-five page form. They’ll need to know how to explain this new form to customers without having many opportunities to work with it beforehand.
Deciding who will need training and in what areas is the obvious first step. Also
to be decided are exactly what information will be covered, whether the training will be instructor-led or online, and how it will be varied based on employees’ duties. Remember that training should include instruction in areas where company employees have responsibility for the actions of third parties. Part of the process of course content development and approval should include a mechanism to determine the effectiveness of the training and making necessary modifications.
Given the complexities, it may make sense to consider purchasing training content from a vendor experienced in its design, implementation and evaluation.
Get the rest of our tips
Compliance management cannot be static. Once prepared for the TILA-RESPA Integrated Disclosure, lenders must also be ready to adjust workflows as other regulations are introduced. In our ebook,“Are You Ready? 5 Ways to Prepare for TRID” author Jorge Sauri explains how lenders can remain compliant in the coming months and implement strategies that will help their financial institutions succeed beyond TRID implementation. Download free and learn everything you need to know for TRID preparation.