Effective October 3, 2015, The TILA-RESPA Integrated Disclosures Rule will affect the New Jersey residential settlement and closing process in ways that impact lenders, attorneys, realtors, title companies, and anyone else who touches the transaction from application to closing.
For many of us, this is old news. While October 3rd has loomed large for months, it’s far reaching affects have made it seem overwhelming to conquer. And, as the pace of business picked up throughout the summer it was too easy to shelve preparations for fall. If this rings true in your office, you are not alone.
Throughout the year I have spoken to legal organizations throughout New Jersey including the New Jersey State Bar Association, NJ ICLE, and several county bar associations. More recently, I met with several industry groups including bank associations, credit unions, mortgage companies, and real estate brokerages. I found that across the board all the players are concerned this transition will not proceed smoothly due to several significant changes in the closing and settlement process.
Before determining the best approach to prepare for the challenges ahead, it is important to understand what the CFPB had in mind when developing new rules that will affect our industry and our day to day practices. I believe the answer is in plain sight for consumers on the first page of the CFPB website.
“Know Before You Owe….Consumers will face less stress when applying for most mortgages after October 3, when our new disclosure rule takes effect. The new rule and disclosures ease the process of taking out a mortgage, help you (the consumer) save money, and ensure you know before you owe “
What does this mean to us? The implementation of industry rules and standards to ensure full consumer disclosure in everything from the Loan Estimate to the Closing Disclosure (CD) Form.
While I don’t have a crystal ball, I am confident that this will ultimately be a positive change resulting in a more unified and simplified method of doing business. Last minute changes will give way to hard and fast closing dates, consumer information will be more secure, and the process will be consistent across the industry.
The end result may be exciting, but the road leading up to and immediately following October 3rd will not be without bumps, detours, and roadblocks. In order to adhere to the strict timeline set forth by the CFPB, lenders will ask settlement agents to speed up their processes, while at the same time carefully guarding against security issues or last minute changes that could compromise the authenticity of the final CD, triggering the process to restart and delaying the closing date. In order to meet demands, lender partners find themselves faced with:
- Putting new policies into place
- Streamlining current ones
- Meeting new industry standards
- Making financial investments in software and staff training
Sounds like a tall order? I agree.
At Two Rivers Title we have been preparing for over a year, and I still breathe a little faster each day as my calendar marches towards October 3rd. Here’s what we’ve done:
Adaptation of Alta’s Best Practices The American Land Title Association (ALTA) created the 7 Pillars of Alta’s Best Practices as industry standards to protect lenders and consumers, as well as ensuring consistency and compliance throughout the settlement process. I believe in the coming months and years, being ALTA Certified will be a key way for title professionals to demonstrate compliance to industry standards.
Staff Training and Education Staff education is critical to the success of any new policy implementation. We began with training of the TILA-RESPA Integrated Disclosures Rule itself, and then followed with updates of new internal policies and procedures, software training, and fielding questions as they arise.
Writing and Implementation of New Policies and Procedures Two Rivers Title has re-written many of its existing policies and put into place new, detailed procedures designed to protect all Non-Public Personal Information (NPI). This took time. Some of it tedious, but all of it necessary. ALTA’s best practices and the new disclosure rules make heightened security measures necessary in all facets of our business.
Synchronization of Software with our Key Lenders Exchanging information through compatible software will become a critical part of the closing process. Processes such as email and fax will no longer be considered “best practices”. In addition to speeding up the process, software synchronization provides a way for lender and settlement agent to share all information while enhancing security and reducing errors through built in checks and balances.
I wish I could say we are so well prepared that October 3rd will come and go with barely a nod. I am not so naïve. Problems will arise and adjustments will have to be made. While working through the transition, keep in mind that growth can only occur through change. And as with any major change, navigating through the implementation of the TILA – RESPA Integrated Disclosures Rule will come with its ups and downs well after October 3rd. Communicating with staff and business partners, reacting to problems, and revising policies and procedures as needed is, and will continue to be, our best defense.