Ensuring Complete Loan Applications For Residential Mortgages
The mortgage industry has gone through some significant changes since the implementation of TRID (TILA-RESPA Integrated Disclosure Rule) in late 2015. The entire mortgage production chain has to work more quickly to produce compliant and accurate loan and closing documents, and the new requirements have caused confusion and bottlenecks resulting in nearly half of all residential mortgages having some type of loan defect. Loan processors are finding themselves re-disclosing, and re-re-disclosing, CDs because of a variety of issues like changes in fees or annual percentages rates, or incomplete loan applications and documentation.
Critical Information For Complete Loan Applications
One of the most common causes of residential loan defects is missing information on the borrower, property, or loan. The following pieces of information and documentation are critical:
- Each Borrower’s Complete Name
- Monthly Income & Verification
- Estimate of Household Debt & Expenses
- Each Borrower’s Social Security Number
- Statements From Bank Accounts And Other Asset Accounts
- Documentation of Current Real Estate Holdings
- Correct Property Address
- Estimate of Property Value
- Estimated Loan Amount
Additional Information Required For Loan Estimate
Once the borrower submits the complete loan application to the lender, the lender has three days to provide the borrower with the initial Loan Estimate (LE), which has to include fairly accurate estimates of all fees and costs the borrower will incur in completing the transaction. For some fees which the lender has direct control over, the LE must include exact fees, with zero tolerance for variation. Another category of fees, including things like recording fees, are limited to variation of 10% of the sum of those fees. The final category of fees required for the LE are called unlimited tolerance fees because they result from choices the consumer makes, and the lender is not held accountable for accurate reporting of variances in these fee amounts in the LE. Changes that exceed the allowances for each type of fee after the initial LE has been issued require a re-issue of the LE.
Critical Information in Closing Disclosures
Closing Disclosures (CDs) are another highly regulated loan origination document where a small piece of missing information can bring the transaction to a grinding halt. In addition to a complete loan application with verified income, debt, etc., an accurate appraisal of the property must be included, along with the loan ID number and borrower ID number, accurate annual percentage rate, identification of loan product, and disclosure of prepayment penalties.
Safeguard Your Document Production Process
Incomplete forms and cures are expensive, and in some cases an error or omission on a closing form can also result in fines and penalties. Easy Soft Real Estate Closing Solutions makes it simpler and faster to produce complete, accurate forms that are in full compliance with TRID requirements, ALTA Best Practices, and HUD and VA Loans requirements. All of the integrated modules in the suite share a secure relational database, so you enter the information once, and all the forms you choose are automatically filled with the correct data. The Forms Library includes more than 200 forms, and allows you to create custom forms which will also auto-fill from the database. You’ll get a notification if you ask for a form and the database doesn’t have all the required information to correctly fill it, so you know you’ll never send out another incomplete for again. Start a free trial of Easy Soft Real Estate Closing Solutions and see how much easier and efficient it is to automate your forms production process.