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Th e M Rep o RT | 25 Feature TRID and Its Impact on Title/ Settlement Professionals Three Issues That Must Be Addressed Before August 1 By John Hollenbeck L enders aren't the only ones who need to prepare for TRID's August 1 implementation date. In fact, title professionals and settlement agents have much work to do, too. In particular, there are a few easily overlooked issues that these professionals will need to address before TRID goes into full effect. Let's take a look at three of them now. Issue No. 1 Lenders stiLL need settLement agents and so do home buyers and seLLers. T he largest lenders—and many mid-sized ones as well—have announced their deci- sion to assume complete control of the preparation and delivery of the borrower's Closing Disclo- sure (CD) form. From a lender's perspective, it makes perfect sense. They are responsible for the content and timely delivery of the CD and for maintaining the evidence of compliance. Lenders still need settlement agents, however, and so do home- buyers and sellers. In many ways, the relationship between lenders and settlement agents will need to be more tightly coordinated than ever before. For example, if the lender produces every version of the CD, lenders must be ready to make changes as the settlement agent makes changes at or near closing. Likewise, settlement agents cannot make last-minute changes at the closing table without the lender's involvement. Last-minute changes involving the borrower must be communicated to the lender, and the lender, if it has decided to do so as a matter of company policy, must then produce a new CD. Issue No. 2 titLe and settLement ProfessionaLs wiLL stiLL need to issue a settLement statement W hile the new borrower's CD is frequently referred to as a replacement for the HUD-1 Settlement Statement, it's important that title and settle- ment professionals realize the CD is not, in fact, a settlement statement. Lenders are obligated to issue the CD, and they are liable for its content. The CD can be thought of a lender's pre- closing disclosure, but it is not a representation of what actually happened at closing. But, homebuyers and sellers are entitled to and will expect to receive an accounting statement from their settlement agent. What happened to all of the money? Who was charged for what? In fact, many states' statutes require settlement agents to issue a statement, and these statutes will remain on the books even once TRID is in effect. With that in mind, title and settlement professionals will wisely conclude they need to continue to issue settlement statements for the fore- seeable future. Look for the American Land Title Association to publish a standard form of settlement state- ment later this year. This form will be voluntary, of course, but will likely be adopted on a wide- spread basis. Some lenders may even require its use. Issue No. 3 settLement agents must vigorousLy work fiLes earLy. T raditionally, title and settle- ment professionals provided the lender with details on charges for a real estate transaction, like payoff demands, HOA demands, tax information, etc., near the time of closing. Under TRID, lenders will need this information up to two weeks before closing, which is a complete reversal in the timing of the deliverables. Let's consider how this plays out. The lender must deliver the CD at least three days prior to "consummation," which can be loosely thought of as three days prior to signing. In the early days of implementation, many, if not most, lenders will deliver the CD via the U.S. mail. This adds another three days to the timeline because the TRID rule provides for "deemed delivery" three days after mailing. If it's a refinance, add another three days for right of rescission. And, in escrow states, add a day or two since signing occurs prior to closing. Lenders will still compete fiercely on closing loans on time under TRID. That won't change. So, given the requirements, it's easy to see and fair to expect that lenders will likely look to mail the CD to the buyer 10 days prior to closing. In order for this to occur, lenders will need the settlement agent's figures early, much earlier than is generally available today. Once an order is placed, settlement agents must have their processes organized so that, at the earliest practical time, they have accumulated all of the information needed to close and can input the information into their production software. No longer will settlement agents be able to schedule these tasks at the tail end of the closing process. The bottom line: settlement agents must vigorously work files early. Moving Toward TRID P reparing for TRID requires all hands on deck. But as long as lenders, title professionals, and settlement agents are prepared and diligent, the new rule should provide a much-needed opportu- nity for the mortgage industry. JoHn Hollenbeck is EVP of First American Title Insurance Company and provides corporate oversight of First American's home office underwriting department. Lenders still need settlement agents, however, and so do homebuyers and sellers. In many ways, the relationship between lenders and settlement agents will need to be more tightly coordinated than ever before.