While I don’t normally like to get into political topics, having just attended a training class on the new “TRID” changes, I felt I just needed to share this.
On the surface, TRID is designed to protect home buyers from shady lenders. But, the new disclosure rules and timelines are, in my opinion, going to do just the opposite.
First, anything “third party” which borrowers have no control over will have a zero tolerance for discrepancy. This typically means the credit agency and appraisal company. Well, the choice of credit agencies is limited to just a few and, yes, the lender does choose which one to work with. But lenders have been required to use an appraisal order mill for the last few years and cannot choose a “specific” appraiser.
What this means is that a typical credit report runs about $18-25. If there’s something reported incorrectly on the report and the lender tries to help the homeowner correct any mistakes, the credit companies typically charge about $8 per credit line, although there could be additional charges. If the lender has disclosed a $25 fee to the homebuyer and it costs more, they can’t charge the borrower for those fees and have to “eat” the cost because of TRID.
As to appraisals, again, it’s an outside company assigning to various appraisers. But, if an appraiser has to drive further for an outlying property or needs to charge a trip fee because of other complications, then any additional fees would need to be “eaten” by the lender.
So, in all likelihood, because of the lender’s inability to charge the ACTUAL cost charged to them by third party entities, I think they’ll all just OVERCHARGE up front and pad their pockets. Rather than a processing fee of say $500, their processing fee will now be $1500. This way, they disclose one time and can’t be fined by the government for making changes. Instead of charging a $500 processing fee, $450 appraisal fee, $100 appraisal trip fee and $27.18 for a credit report with the net effect to the consumer the government is trying to “protect” will be an additional $422.81 in fees. But, hey, the mortgage company can’t be out of “compliance.”
Then, there’s the “new and improved” way of disclosing interest. When the original TIL’s came out, that was confusing enough. But with the new TRID, interest needs to be disclosed this way: TOTAL COST. If a borrower takes a $100,000 loan and, because it’s a 30 year mortgage, pays $70,000 in interest over the next 30 years, the new TRID requirements state the lender must disclose the interest rate is 170%. Gotta love this one!!!!
And, finally, as agents, if we referred our clients to any of these low life mortgage companies who aren’t in “compliance”, we can be fined in addition to the mortgage companies. Never mind that we’ve used Nick or Anna for the last 5 years and know they will get the loan completed on time. Let the home buyer “shop for themselves” and pick out some schlock company who’s way over charging them and misses the close of escrow. But, hey, they’re in compliance with TRID..