Inconsistent mortgage disclosure

One of these mortgage disclosures is not like the other

Settlement agents may be a source of compliance risk for investors

In the two years since TRID was implemented, many settlement agents have begun creating separate settlement statements beyond the TRID disclosures, which can lead to inconsistencies across mortgage documents.

Why are settlement agents doing this? The ATS Secured Mortgage Investor White Paper offers one explanation:

[M]any state laws require title and settlement agents to charge and disclose title insurance premiums based on rates that are filed or promulgated with the states. The calculations under TRID do not match the actual costs based on these filed or promulgated rates, so many title insurance companies use the separate settlement statement to disclose actual costs of title insurance and demonstrate that they complied with state law.

That’s all well and good. However, in attempting to be compliant with the state law, settlement agents may be inadvertently creating aberrations comparative to the closing disclosure—and in the process, becoming non-compliant with TRID.

The danger of non-compliance is heightened when different parties also use different systems and tools, as participants do not have the ability to verify whether the other party’s data is correct. Redundant data and effort also introduces more opportunities for error.

Andy Arculin, a member of Venable’s Regulatory Group and the CFPB’s Task Force, explained in this article how technology needs to come into play, to help with these problems:

“Although compliance has improved, settlement agents and lenders continue to struggle with poor communication tools to articulate fees back and forth, which ultimately can delay loan closings. The two groups need a good technological solution to allow free communication of fees and their placement, but that also ensures security and privacy for customers.”

ATS Secured is one place for all your mortgage disclosure needs, with every appropriate party able to see the data and disbursements.

Contact us today to learn more!