Well, it’s almost that time of year. Close finishes. Drama. Late heroics. Bubbles bursting for many of the unlucky…
That’s right. It’s almost time for TRID Madness!
Why? Is something else going on in the near future?
August isn’t far away, and there’s some real concern out there about who will be ready for the new TILA-RESPA Integrated Disclosure rule (TRID)…and who won’t. Many of us remember the chaos (mostly on the settlement side, but not entirely) caused by the form change for the HUD-1 in 2010. ”Hiccup” is probably too mild a word for what ensued in the months after the new forms were mandated. But what happened over that frantic period will likely be nothing compared to what could take place after August this year.
Although we’ve heard that the biggest of the big are pretty much ready, and that much of the title industry has been moving on this for awhile, August will reveal which “solutions” work…and which don’t. But when I hear that a good number of businesses on both sides of the transaction haven’t even started testing their systems yet, well, I wonder how August will go. It appears that many didn’t truly realize that this is (and I apologize if you’ve heard this before, but it’s true) NOT a forms change. This is a process change, which will require the businesses making the mortgage come to reality to collaborate in one way, shape or form. This is new stuff.
On top of this, lurking in the background, we have a regulatory and enforcement entity which, to date, has shown little inclination to give the housing industry the benefit of the doubt or a mulligan on mistakes. This ratchets up the tension that much more…so much so that some lenders are privately conceding that if they’re not ready in August, they’ll put a moratorium on mortgage loans until they are. We’ve known since 2010 that big changes were around the corner for our industry. We’ve talked about it and talked about it. Well, it’s here. QM, it appears, was just a tremor…a bit of foreshadowing for what we’re probably about to feel.
Here’s hoping those who have taken TRID lightly don’t find themselves kicked out of the dance too early.
We’ve all been hearing about consolidation, “the new normal” and other varieties of the end-of-the-world-as-we-know it now for about six years. There’s no doubt that the mortgage industry (including its satellite in the title and settlement services world) has changed. We have a new sheriff in town with a much bigger sidearm. We’ve got a lot more attention focused on us. And we’ve had a market turbulent and inconsistent enough to make most of us believe that “upheaval” would be a calmer state than what we see now.
And yet, through it all, I’ve seen a tremendous number of players sticking to their guns, playing the game the way it has always been played.
Until this year.
Although you’d have to be living under a rock, lodged under a larger rock in the back of a cave, not to have heard about the changes happening now (ATR, QM, soft market/impending purchase market) and in the future (possible GSE “reform,” RESPA/TIL disclosure form change), there do seem to be some cave dwellers out there when it comes to compliance. That’s not meant to be disparaging. But it’s the truth. I’m hearing things like “August, 2015 (the date the RESPA/TIL forms become reality) is a long way away. I have to find a way to stay in business until then, first.” A good number of title professionals I talk to are paying attention to the regulatory changes affecting their operations and doing their best to comply. But they’re much, much more focused on where the next orders will come from. Compliance is affecting the market. And while the CFPB or any state regulator can put you out of business for failure to comply, a lack of orders will put you out of business. Period.
Which leads me to believe that maybe, just maybe, we’re not dealing with cave dwellers after all, but rather, reality.
It’s tough making a living in the title industry these days. Compliance is not an optional course, but if you’re struggling to keep the lights on, preparing for next month or next year’s rule may not seem realistic.
This is the point, of course, where I should be telling you that now’s the time to figure out how to cut costs. There’s great tech out there, legitimate outsourcing and other ways of optimizing your business to ensure you’re not wasting a dime. Most of this, however, can be expensive and/or painful in the short term. One doesn’t just snap one’s fingers and awaken to a whole new way of business. Then again, the alternat
However, it appears to me that, this time, a “new normal” really is emerging. Hunkering down no longer seems to be an option. While the mortgage lending industry will indeed stabilize eventually, it won’t be going back to the way it was in 2006. And those who survive will really be those willing to make some life-changing decisions now.