“A racehorse that consistently runs just a second faster than another horse is worth millions of dollars more. Be willing to give that extra effort that separates the winner from the one in second place.”
– Jackson Brown Jr., American author
The race for cured and 100% clean TRID loans has begun.
Fitch, Moody’s and Kroll Bond Rating Agency (KBRA) have all come out with a similar statement on the Know Before You Owe rule and what loans with violations will mean to the secondary market: they’re not a big deal.
But, really? How could a violation be nothing to worry about?
If You Look Below the Surface, There’s An Iceberg of Reasons Mortgage Lenders Should Be Zealous In Curing TRID Violations.
Consider this statement from KBRA:
“In instances where these (TRID) violations go un-corrected by an originator, KBRA believes the risks associated with TRID-Eligible Loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining to rate the transaction.”
A violation is a violation, no matter how small. And TRID violations, even minor ones, could reduce a loan’s value to investors.
That’s Why Cured, 100%-Clean TRID Loans Will Be the Next Big Trend In Mortgage Lending.
If loans are not cured by the allotted timeline specific for each violation, rating agencies will rate them lower. Even if a credit risk is AAA rated, if it has incurable TRID violations it could be downgraded to a D, according a report from Fitch Ratings:
“While Fitch has not finalized its guidance to due diligence firms for the grading of the errors, Fitch currently expects to request that uncured TRID errors within the seven areas noted above be assigned a grade of ‘D’, uncured errors in any other TRID area be assigned a grade of ‘C’; any identified error that is cured prior to securitization be assigned a grade of ‘B’ and loans without any issue be assigned an ‘A’.”
Lenders who consistently deliver a better product—those that distinguish themselves by eliminating even minuscule TRID violations—won’t have to take those discounts. But a business that stops short of eliminating every error and says, “it’s good enough,” will be discounting some loans when violations pop up.
But What If Your Mortgage Business Did Not Have To Cure TRID Violations? Why Not Stop Them Before They Start?
ATS Secured has created tools to help all parties in the loan process collaborate to create 100% clean loans from origination through closing, helping to eliminate the need to cure violations altogether. We help lenders and other mortgage participants by giving them that extra second in the lending race.
If mortgage lenders want to be the frontrunners in the secondary market and have the best possible success (maximize price) in selling their loan pools, they will need to reach beyond “good enough” and originate clean TRID loans right out of the starting gate.
Interested in learning more how to make your mortgage process easier? Contact ATS Secured today!