The Consumer Financial Protection Bureau's reprieve of the original TILA-RESPA Integrated Disclosures implementation deadline has given vendors additional time to refine their changes and conduct further testing to ensure everything will operate as it should come Oct. 3. Lenders should be using the extra time to their advantage, and should expect a high degree of TRID-readiness from their vendors.
Vendor management requirements stipulate that lenders are responsible for determining their vendors' readiness to comply with regulatory changes. There is no universal definition of "TRID-ready" and, in many cases, the term has been used more for its marketing value than as a concrete indication of a vendor's level of preparedness.
But, generally, if a vendor is TRID-ready, they have the ability to generate all of the required documents, calculations, and have provided integration information to other vendors, even if those other vendors are still working on completing their integrations.
Given the nature of the changes and what's required on the vendor side in order to create a TRID-compliant process, there are certain elements that must be in place for a vendor to be completely ready.
One signal of a vendor's TRID-readiness is education. Any vendor whose system has been substantively changed by TRID will have had to study the changes closely. Thus, the vendor should be able to offer some form of TRID education or training, even if it is simply an explanation of the related changes to its system.
In addition, the new rules have required vendors to update their systems with additional fields in order to complete the new disclosures correctly. A TRID-ready vendor has those fields added to its system and ready for users to view.
Bear in mind that the number of fields might have increased significantly, as some forward-thinking vendors are wrapping Uniform Closing Dataset updates in with TRID changes. If a vendor's system doesn't have substantive, TRID-related changes, that may be an indicator that all is not as it seems.
Furthermore, any vendor claiming to be ready for implementation should allow lenders to test the changes. Doc prep vendors, for example, should be able to generate at least a beta sample Loan Estimate and Closing Disclosure.
Beyond the addition of new fields, one of the biggest hurdles for vendors is updating their integrations with other vendors. This is the last piece of the TRID puzzle.
The vendor needs to have its own changes ready before it can ensure the compatibility of its changes with its partners' platforms, and depending upon the number of partners a vendor has, completing every single one of those integrations can take time.
Generating a Loan Estimate or Closing Disclosure from the up-front system before confirming back-end systems are wholly ready for TRID is one step lenders should not skip. Integration between vendors is an important piece of the puzzle.
While not strictly required by the disclosure rules, the adoption of advanced MISMO standards is a secondary indicator that your vendor is preparing not only for TRID, but beyond.
MISMO 3.3 is designed specifically to be compatible with the TRID changes. Some, but not all, vendors appear to be able to accommodate lenders that are moving to this data standard in preparation for the TRID.
For other lenders and vendors that are still operating on the MISMO 2.6 standards, it is imperative that they talk about how they have modified the MISMO 2.6 standard defaults to acquire all the needed information to comply with the integrated disclosure rules.
One signal that should not be cause for concern, however, is a vendor that has continued to fine-tune additional TRID-related system changes past the original Aug. 1 deadline.
Preparations to have changes fully implemented on or before Aug. 1 were conducted under serious time constraints. As such, the final product, though functional and compliant, may not have been as aesthetically-pleasing or user-friendly as the vendor or end-user would want them to be.
As it is the lender that will bear the ultimate consequences for TRID noncompliance, verifying their vendors' "TRID-ready" claims is a necessary mode of operation for today's mortgage lenders.
Mark Mackey is CEO of International Document Services.