Depending on how a Mortgage Broker runs their operation, the ability to have the wholesale lender doing the Loan Estimate for them has been both a plus and somewhat difficult. Why? Well, it all comes to three specific reasons that are now emerging. Certainly not all wholesale lenders have these issues or circumstances, but I am seeing this with many wholesale lenders.
- Many wholesale lenders’ compliance departments have taken steps far beyond TRID compliance to ensure they don’t have an issue with their compliance with TRID and any potential errors. This usually creates more work and adds more time to the mortgage loan application process. The reason is very simple. The Consumer Financial Protection Bureau has not given any warm and fuzzy best effort feelings at compliance during the initial implementation of TRID. Remember this is an entity with unlimited funding, no oversight and run by one individual like a dictator. What could possibly go wrong? So, yes, I do understand the wholesale lender’s being overly cautious, but this still creates timing problems.
- It has come to light that many wholesale lenders are now charging for issuing the Loan Estimate. That is they are raising their lender fees when they are issuing the LE. While they cannot pass such a fee onto the borrower, they can raise their lender fees to the Mortgage Broker for this service and this obviously reduces profit.
- The last issue is one of significant concern and many Mortgage Brokers are looking to see this problem corrected quickly or they may be forced to pursue a different TRID philosophy. The issue is pretty basic and that is the Loan Estimates being sent to the borrowers are not correct. In some cases, the Loan Estimate has been incredibly inaccurate and has cost the Mortgage Broker the transaction since the numbers are not even close to those quoted to the borrower. This is a serious concern that wholesale lenders need to address now. I suspect they are using basic wage employees, who are not TRID trained per se, who are just punching in numbers without understanding what they mean.
Mortgage Defense will continue to monitor the above issues and keep you current with policies, procedures and cures that wholesale lenders are implementing to address the above concerns.
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