When the TILA-RESPA Integrated Disclosure (TRID) rules advanced by the Consumer Financial Protection Bureau (CFPB) went into effect last October, many worried that compliance concerns would force larger lenders to suspend all activity with smaller settlement agents and title companies.
According to Ernst Publishing Company, a provider of technology and closing cost data for the real estate and home finance industries for the past 26 years, that crisis was averted by technology.
"Having the nation's largest lenders boycott smaller firms over the fear that they would not be able to comply with TRID was a very real threat last year and could have changed the entire landscape of the lending business," said Gregory E. Teal, President and CEO of Ernst Publishing. "We've been working with many of these companies for over 26 years and there was no way we were going to allow that to happen."
Ernst's answer to TRID was its Settlement Agent Gateway, a collaborative fee management system the company launched last spring. The technology allows settlement agents to work with lenders to negotiate fees and then manage these fees in a web-based tool through which they certify the accuracy of their fees and then make them available to lenders who need to provide Loan Estimates required under the new requirements. This ensures full TRID compliance, protects the lenders from having to re-disclose later for quoting the wrong fees and protects smaller settlement agent firms from being pushed out of the market due to non-compliance concerns.
The technology is simple to use and uses MISMO data standards to allow the settlement agent to enter pre-negotiated fees into a spreadsheet that includes cells for the required services by geography, and then certify that the fees are accurate with a single click.
Teal pointed out that Ernst's Gateway is not a closing portal. "Fees must be disclosed accurately to borrowers long before they get to the closing table. Both lenders and settlement agents needed a tool that will allow fees to be negotiated far in advance of the close and then locked into the lender's closing cost search engines. Our software makes that possible," Teal said.
"Lenders under TRID must have 100 percent accurate fees for compliance purposes creating challenges when working with fees from many providers. TRID could have put a lot of good companies out of business," said Jan Dalton Clark, VP of Sales and Marketing for Ernst. "This would have been disastrous for smaller industry firms, but it would have also put lenders at a competitive disadvantage because it would have dismantled their local business referral networks across the country."