1) The article discusses the challenges that lenders faced when TRID was first implemented in October 2015, including issues with software readiness, unclear requirements, and increased time and costs required to manage processes like quality assurance and closings. 2) It describes improvements made over the following nine months as software improved, knowledge increased, and workflows were refined. However, difficulties remain disclosing "special situations" not clearly addressed in regulations. 3) It recommends steps for the short run, like automated software controls and analytical reporting, and operational procedures for special situations. In the long run, lenders should continue learning best practices and revising processes in anticipation of revised CFPB guidance.

1. 24 New Jersey Banker Summer 2016
Feature
T
he news on April 28, 2016, of a potential TRID rewrite was
met with online cheers from mortgage and compliance pro-
fessionals across the U.S. Consistent with the April spring
season, hope sprung eternal that the CFPB would bring clarity to the
aspects of TRID that remained fuzzy and provide much needed guid-
ance for banks to follow. This article will ex-
plore how we got to this point on the rocky
road called TRID, and how to tackle TRID
between now and the time any revised guid-
ance is released.
THE EARLY DAYS
In October 2015 (the early days) TRID hit
like a TRID-ent missile and mortgage lenders
experienced widespread changes to their pro-
cesses, procedures and workflows. Attaining compliance with the ac-
curacy and timing requirements of the two new disclosures – the loan
estimate (LE) and the closing disclosure (CD) – was difficult in the
early days due to the complexity of the requirements and the readi-
ness of the loan origination/forms software vendors to address those
requirements. (See sidebar, “Top TRID Challenges of 2015.”) Even
when lenders successfully met the accuracy and timing requirements,
many had difficulties documenting their compliance. They didn’t
have time to implement documentation procedures because there was
simply too much that was new at once.
Lenders became jittery over the possibility of examination find-
ings, having loans returned by investors, and even lawsuits. More
importantly, though, lenders became concerned about the additional
resources and time required across the enterprise to manage key pro-
cesses in mortgage lending: 1) the quality assurance (QA) process;
and 2) the closing process. Lenders understood that managing the
QA and closing processes would increase the likelihood of providing
accurate disclosures to the borrower, but found that the processes re-
quired additional time and people. Combine this with the additional
time mortgage and IT staff spent on the phone with software vendors
asking questions and installing dozens of software updates, and you
can quickly see the time crunch that existed. The additional time re-
quired in the early days was costly and challenged the lender’s abil-
ity to deliver timely disclosures – in some cases, it resulted in delayed
closings.
TRID’s Rocky Road:
Past, Present and Future
By Sharon Blanchette
Sharon Blanchette
Top TRID Challenges of 2015
1. The readiness of software systems:
• Formatting errors in the disclosures (decimal places,
number of digits, alphabetizing fees, font sizes, proper
placement, blank information, etc.).
• Calculation errors in the disclosures – math errors,
sub-totaling errors and errors in interpretation of how
the calculations should occur.
• Numbers not flowing from one table in the disclosures
to another table properly.
2. Mis-mappings of settlement fees into tolerance categories
during the configuration of the software leading to
tolerance errors and missed “cures.”
3. Difficulties interpreting the new definitions of loan
“purpose.”
4. Difficulties with lender credits, especially understanding
what the impact of a decreased lender credit was.
5. Uncertainty about when to send revised loan estimates
(LEs) and closing disclosures (CDs) and the implications
of such. There was much confusion around “when must I
revise,” “when can I revise” and “when can’t I revise.”
6. Uncertainty about who must receive copies of the LE and
CD, especially when a transaction is rescindable.
7. Errors where manual input was required, such as inserting
the vendor name for a settlement service.
8. Timing violations with sending the disclosures, and
closing delays. Oftentimes timing violations were caused
by a quality review process interjected into the workflow,
creating a logjam.
9. Difficulties with new closing processes – who will issue
the CD, how will the communication take place to ensure
an accurate CD.
10. Difficulties with disclosing the “special situations”
described below.
11. Uncertainty about how to cure and when to cure, and
when to send a revised CD post-closing.
12. Difficulty documenting compliance. Procedures and
workflows not updated to enable the capturing of the
lender’s compliance.

2. Summer 2016 New Jersey Banker 25
TRID TODAY
Nine months of effort by lenders and software vendors brought
many improvements, including:
• Improvement in the ability of software to produce compliant
disclosures – to the extent that the software vendors could inter-
pret sometimes fuzzy regulatory requirements. Most of the ini-
tial errors with formatting and calculations have been resolved.
• Improvement in the mortgage staff’s knowledge of how their
software handles TRID transactions, resulting in fewer mapping
errors and missing information on disclosures.
• Refinement of workflows, especially in the change of circum-
stance/reissue process, the closing process, the cure process, the
QA process and how to document compliance.
• The decrease in QA and post-closing error rates.
Despite the positive accomplishments above, many TRID chal-
lenges remain and the road remains rocky. There is difficulty with
disclosing “special situations” – meaning those mortgage scenarios
that aren’t clearly addressed in the regulation. Not only are lenders
struggling with the lack of guidance regarding how to disclose spe-
cial situations, they’re also struggling with disclosures that weren’t
designed to accommodate the disclosure of the special situations.
The result is that it’s any lender’s guess as to how to disclose some
special situations. Below are examples of those special situations.
• Disclosing anything pertaining to construction-to-perm loans,
such as:
-- Selecting the appropriate “purpose” (construction loans can be
any of the four purpose types: purchase, refinance, construc-
tion and home equity purposes).
-- Disclosing construction holdbacks in the LE and CD.
Although the above may seem like an annoyance, it has caused
some lenders to simply discontinue making construction loans.
• Disclosing payments in the projected payments table, validating
the amount paid in five years in principle, interest, MI and loan
costs in the comparison table, and validating TIP, especially on
construction-to-perm loans that are ARMs.
• Disclosing what are frequently called wrap-around mortgages.
• Disclosing simultaneous close mortgages.
For many of the situations above, the lender might believe they
have a solution to disclose properly, but the software they use might
not support the solution.
There remain some difficulties with the detailed requirements in
each form, especially where staff have to manually enter informa-
tion into the software. Failing to enter this information, or check a
box, results in field-level errors, such as a missing vendor name on
a disclosed service on page 2 of the CD, or a missed checkbox on
page 4 of the CD explaining why an escrow account wasn’t set up.
There has even been a slight increase in HMDA coding errors
due to staff applying the TRID “purpose” definitions to HMDA.
(See sidebar, “TRID ‘Purpose’ Versus HMDA ‘Purchase.’”)
MOVING FORWARD –THE SHORT RUN
The following four items (two of which are technology-related)
will save time and improve TRID compliance overall, and should be
considered over the next few months as lenders anticipate revised
TRID guidance:
Implement automated software controls: The controls can be
programmed in the software system such that manual input fields
become mandatory and can’t be skipped over. This can be useful
for not only inserting vendor names for settlement services, but also
for ensuring that recording fees are broken out properly on the CD.
There are likely more areas where automated software controls can
increase compliance, and mortgage lenders should have a strategy
meeting where they brainstorm how they can enable and program
the software to help them maximize compliance.
Implement analytical reporting: The use of analytical report-
ing creates a continuous monitoring situation of certain fields (that
lenders identify) in the disclosures, using reports crafted in the soft-
ware system. This activity can identify and report on field-level er-
rors that would take hours to identify via manual reviews. Most
lenders should be able to craft analytical reports in the software, but
some may need vendor assistance with identifying the correct data-
base fields to include in the report and designing the format of the
report.
The careful use of analytics can assist mortgage department
managers, quality review managers and compliance officers with a
cost-effective solution to quickly spot errors, freeing up personnel to
focus on the more complex issues in a file, such as the special situ-
ations mentioned above. This results in greater compliance overall.
(See sidebar “Examples of Analytical Reporting in Action” for an
example of how analytics identified dozens of errors that could be
fixed before closing.)
Attend TRID workshop training and/or “top findings” train-
ing: TRID cannot be taught by reciting regulatory citations in we-
binars. Lenders will learn the most from attending workshops that
utilize real scenarios and forms. Lenders can also benefit from at-
tending sessions on “TRID top findings” because that, too, uses real-
life material. Even though lenders anticipate revised guidance, the
more they understand about the current issues, the more they’ll ben-
efit from the revised guidance.
Write operational desk procedures: During the early TRID days,
it was impossible to write operational desk procedures, because there
TRID ‘Purpose’ Versus HMDA ‘Purchase’
A borrower intends to refinance their existing mortgage
on their current residence, to be secured by their current
residence, in order to purchase another single-family
residence.
HMDA: This would be a “purchase” for HMDA coding.
TRID: This would be a “refinance” for TRID.
If HMDA coding staff use the TRID definitions of
“purchase” and “refinance” on the LE or CD for coding the
HMDA LAR, there will likely be HMDA coding errors.
continued on next page

3. 26 New Jersey Banker Summer 2016
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simply wasn’t time and workflows and procedures weren’t quite estab-
lished. There’s no time like the present for this. Writing operational desk
procedures for the special situations described above will help document
the “reasonable” approach that was chosen and help ensure that the ap-
proach is consistent each time. Lenders should include the following in
the operational desk procedures: what is done, how it’s done, when it’s
done, how it’s documented and where the documentation resides.
MOVING FORWARD - THE LONG RUN
More than any other consumer regulation in the past, TRID impacted
processes and workflows throughout the mortgage cycle starting with the
application process and ending with post-closing quality review. The road
has been rocky and compliance with the regulation has been difficult for
lenders, due in part to the lack of clarity in the regulation in certain areas.
Over the next year, however, lenders should continue to learn about best
practices from TRID gurus on posting boards and in seminars, should con-
tinue to revise internal processes and procedures, and should look forward
to revised guidance from the CFPB to clarify some of the fuzzy areas. ■
Sharon Blanchette, CPA, CIA, CRCM, CAMS, MBA, is a director with FIS
Risk, Information Security, and Compliance (RISC) Solutions. She invites you
to link with her on LinkedIn.
Feature continued from previous page
Examples of Analytical
Reporting in Action
In the early days of TRID, ABC Bank kept noticing that
page 4 of the CD had the checkbox checked for “will
not have an escrow account because,” yet neither of
the reason checkboxes were checked. Mortgage staff,
working with their software vendor, designed a report
that showed every time page 4 of the CD indicated
there wouldn’t be an escrow account. The report also
showed which of the two reason checkboxes were
checked. CDs that had neither of the reason checkboxes
checked were flagged on the report and fixed quickly,
prior to closing. This report was run daily. ABC Bank
also uses analytics to alert them proactively regarding
an approaching deadline or expiration.