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Th e M Rep o RT | 15 T he financial services industry has been waiting for the Dodd-Frank Truth in Lending Act and Real Estate Settlement Procedures Integrated Disclosure (TRID) rule since 2010. It has been a long journey since then, marked by extensive consumer testing by the Consumer Financial Protection Bureau, a proposed rule, a comment period, and months of education, planning, and preparation by vendors and originators. Ready or not, game time is upon us. The final rule was released in late 2013 and will take effect on August 1, 2015. With mandatory compliance now just a few months away, the industry is faced with the reality that there is little time left to ad- dress implementation. The institu- tions that seem to be in the best position now are those that have been proactive and educated them- selves, taking advantage of industry Webinars, conference calls, and briefings to get their arms around all of the requirements. Institutions with dedicated legal and compli- ance teams have likely invested significant resources in grasping the large amount of material related to these changes. Some larger institu- tions have conducted studies of the impact on their organizations and are likely in a good place in terms of readiness, but given the magnitude of this change and its impact on business processes and work flow, there are some critical questions mortgage originators will need to immediately ask them- selves in order to determine wheth- er they will be able to continue to operate come August. Compliance and consulting subject matter experts across the industry have been engaging in conversations with origina- tors and the regulators to ensure August 2015 readiness. Based on the many industry observations and conversations we have had, Wolters Kluwer Financial Services understands that implementa- tion of a regulation as massive as the TILA-RESPA integrated disclosure rule presents a number of challenges. Here are five key questions institutions should consider in assessing their level of readiness for the TILA RESPA Integrated Disclosure rule: • Do I understand what the dis- closure documents are and all of their unique requirements? • What is the impact to my busi- ness process and workflow? • What are the effects on my software systems? • How are my vendors handling the changes, and what is their level of readiness? • What is my training plan? 01 What are the TILA- RESPA Disclosure Documents and Requirements? T he TILA-RESPA integrated disclosure rule itself is primarily concerned with the creation and delivery of two new documents: the Loan Estimate, which replaces the current initial TIL and the GFE; and the Clos- ing Disclosure, which replaces the closing TIL and HUD-1. Until you really dive in and understand the nuances in the regulation, it's hard to imagine that implement- ing two documents can be such a big deal. These documents, however, are unlike others we have seen in recent years in some critical ways. First, it's important to under- stand that the CFPB conducted ex- tensive consumer testing with these documents, so the final presentation of the documents—the content and the look and feel—are two critical components of this regulation. The content that populates these disclosures is intended to be transaction-specific. This means that only information relative to the borrower's transaction may be presented on the form. The result is that the presentation of infor- mation will vary based on the details of the loan. The regulation has a number of very detailed requirements related to the orga- nization and presentation of this content, including the number of tables that must appear, the orga- nization of fees (largely alphabeti- cal in this case), and specific rules around bolding, rounding, and aggregating of information. While these changes result in documents that are much more readily understood by consum- ers, it leads us to the second area to mention relative to docu- ments: the extensive education (or re-education) process that goes with these changes. While it would be easy to look at this as just one more training hurdle to overcome, we think the CFPB intends these documents to really be a game changer in helping consumers be knowledgeable participants in the mortgage origination process. Lenders successful at helping all those within the origination cycle who deal with both the consumer and the documents to gain a deep understanding of these forms and their many variations, can truly provide a best-in-class customer experience. This is one time where compliance really can positively impact the bottom line of an institution by drawing in and retaining customers. 02 What is the impact to my business process and workflow? T here are a number of changes within this regula- tion, however, that will affect the lender's operational practices in significant ways as well. For example, significant challenges involve determining which entities in a relationship will provide which requirements and the subsequent business pro- cesses needed to support those decisions. Additional consid- erations include working with the timing requirements of the regulation for the provision of the disclosures and the impact of this rule on the current clos- ing process that many lenders have in place today with their settlement agents. On the front end of the pro- cess, there are key questions that need resolution between brokers and lenders: • Who is doing the Loan Estimate? • How will we work together moving forward? • Does your present business relationship have clear terms on how to deal with things like workflow, re-disclosure, ac- curacy of fees, and the manage- ment of tolerance? As with the current TILA and RESPA regulations, timing is a critical component in the revised regulation, and also a challenge. The Loan Estimate timing require- ments are consistent with that of today's disclosures (the Good Faith Estimate and Early TILA disclosure), which is to say that it is required within three business days of the application's comple- tion. New to the process is the requirement to provide the Closing Disclosure three business days prior to consummation, which 2015 tila/respa update

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