TRID may be delayed for a while. But, Lenders still need to be concentrating on compliance and quality. CFPB may be concentrating on more regulation, but, Fannie and Freddie continue their increased emphasis on defect management. FHA is now following suit with the announcement of their new defect taxonomy. The goal? Loans made with ZERO defects. You can bet on it!
Loans are being carefully scrutinized to provide lenders with detailed feedback on defects, to help identify potential problems and where improvements are needed.
The intent is to help lenders improve the quality of the loans either delivered, in the case of the Agencies or insured by FHA. Better quality loans make for better investments and better performance. That is all good for buyer and seller. A safer bet.
However, these careful defect reviews also point out those lenders with poor quality loans. These lender’s loans will receive a more detailed review. A byproduct, albeit maybe intended, is to identify problem lenders and loans, so appropriate action may be taken.
Sometimes, such action is as simple as additional training, but at other times it could lead to loan indemnifications, repurchases or a more severe lender penalty. When you receive feedback from these entities, take heed and do whatever needs to be done. Make corrections in process and performance so as to demonstrate improvement. Don’t ignore the warning signs.
More importantly, don’t wait. Be proactive in your approach toward loan quality and compliance. Have the training, processes, and systems in place to avoid errors and if they occur to detect them early.
Don’t look at pre-closing audits as an expense but rather as an investment in quality. An investment, when used correctly, that will pay off in big dividends. Whether performed in-house or outsourced, these reviews can and will save a lender money in time, effort and reduced delays. Returns from reduced loan expense, more loans handled per person, and happier customers. A pretty good trifecta.
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TRID may be delayed, but you can bet your bottom dollar that when it comes, CFPB will monitor compliance carefully. All the while, Fannie, Freddie, and FHA will be keeping a close eye on loan quality.
What will you be doing? I suggest you work to improve your odds by improving loan quality and compliance. Play it safe; why take unnecessary chances?