The new TILA-RESPA Integrated Disclosure rule from the Consumer Financial Protection Bureau is delaying mortgage closures and causing banks to trim their offerings, according to a survey from the American Bankers Association.
About a quarter of the survey’s 548 banker respondents have eliminated certain mortgage products because “the rule does not provide adequate compliance direction,” ABA said. Some of the offerings banks have eliminated include construction loans, adjustable rate mortgages, home equity loans or payment frequency options.
More than 75 percent of survey participants said loan closings are being delayed as a result of the TRID rules. On average, bankers reported a delay of eight days and even as much as 20 days. More than 90 percent said front-boarding and loan processing times have increased. Ninety-four percent of respondents believe the TRID “good faith” grace period should be extended.
The survey found that 78 percent of respondents are still waiting for system updates from their vendors and 83 percent are forced to use manual workarounds. About half of survey participants said their bank will have to or has already hired additional staff to comply with the new rule.
“We restructured our loan staff and created dedicated/specialized loan originators and processors who only handle TRID. For a small community bank, this isn’t the best use of our staffing,” one banker said.
To ensure compliance with the 2015 TRID rule, 470 respondents said they have dedicated additional staff hours in internal loan compliance review and due diligence processes; 457 respondents said they had to offer additional staff training; 403 said they adopted pre-closing reviews and 368 said they adopted post-closing reviews to ensure compliance.
“It’s clear from this survey and our discussions with bankers that TRID compliance remains a significant concern,” said Bob Davis, ABA executive vice president, mortgage markets, financial management and public policy. “Consumers are seeing the greatest impact due to increased loan costs, fewer choices and delayed closings – and that’s not what this rule was intended to do.”
The American Bankers Association 2016 TILA-RESPA Integrated Disclosure Survey was conducted from February 1, 2016 to February 17, 2016. The respondent group was composed of banks of varied geography and asset size, with the majority of respondents (61 percent) representing institutions in the $101 million to $501 million range.