Preparing a HUD for closing in the current mortgage process is quite difficult, as there can be many missing components, different documents to sign and approve and many entities involved that do not communicate with one another.
Closing a mortgage loan could be comparable to the poem “The Blind Men and the Elephant.”
The poem depicts six blind men who “to learning much inclined” have encountered an elephant. Each of them proceeds to touch different areas of the elephant’s body and then declares their idea of what they think the animal looks like.
The second stanza is as follows:
“The First approached the Elephant,
And happening to fall
Against his broad and sturdy side,
At once began to bawl:
‘God bless me! but the Elephant
Is very like a WALL!'”
The poem continues detailing each blind man’s concept of the elephant. The second blind man felt the elephant’s tusk and likened the animal to a spear. The third felt the trunk and compared it to a snake. The fourth’s assertion was that the elephant was a tree because he felt the animal’s knee. The fifth disagreed with everyone else because he felt the ear and maintained the elephant was like a fan. The sixth felt the tail and associated it with a rope.
The mortgage closing process is remarkably similar to this poem in that, though each of these men felt a part of the animal, they couldn’t see the whole elephant and consequently were all wrong in their statements. They could only guess at what they were missing through the assertions of their fellow blind men. In a mortgage closing, many errors are caused through the many different silos and lack of proper communication; however, it is also caused because much information is only guessed at.
The TILA-RESPA Disclosure Rule states that the HUD needs to be provided to the consumer three days before closing. At times, there are certain documents in the HUD that are incomplete or missing altogether. According to TILA-RESPA, if due diligence has been followed and that information is simply unavailable in the restricted time limit, the lender is then supposed to make “good faith estimates” to fill in the missing or incomplete data. The standards for these estimates are that the lender can rely on other parties to provide quotes and must at least use the generally accepted calculation tools.
Is it any wonder that HUD documents are riddled with errors? The groups involved are blinded by incomplete and, at times, false information. Many times they are reduced to guessing what they think the data should be.
How is such a problem going to be fixed in the current system?
It can’t—a new system needs to rise up and take its place.
Let us not be like the six blind men from Indostan who disputed “loud and long” over what the elephant looked like and “though each was partly in the right . . . all were in the wrong”. There should be no guesswork in the important process of buying a home.
Want to make your mortgage process easier and more accurate? Contact ATS Secured today.