To See the Benefits of TILA-RESPA, Stay Positive

Most companies have not had the time to identify the positive impact of the Truth in lending and RESPA Integrated Disclosures that must be used with applications beginning Aug. 1. If you are just starting to identify procedural changes, there is cause for panic — but be careful about the message making its way to the street. Sales teams are hearing messages of doom and gloom caused by the new three day waiting period prior to closing. (The pragmatists assume there will simply be the same old problems, just three days earlier than before.) Emphasizing the positive factors of the changes is an important part of ensuring the project team is developing the right procedures and sending the right message throughout the company.

A good place to start when creating the right message is asking originators what they don't like about the current Good Faith Estimate and TIL, and the closing agents what they don't like about the HUD-1 and TIL. The list gets long in a hurry, but the most common complaint is that customers don't understand the forms.

Originators need to make dramatic adjustments to their script and embrace the positives of the Loan Estimate when discussing the cost of the financing with customers. Include a message that gives some credit to the development process it took to get to this point. The same holds true for closing agents dealing with the Closing Disclosure.

To help break down the natural resistance that occurs when the government sets out to change what we think we know about customers, it is critical to understand the level of testing that was conducted by the CFPB. There is a full description of the development and testing phase of the new disclosures, complete with clickable timeline, at the Know Before You Owe website. Everyone in the mortgage industry should learn about this process and grasp that these forms went through a very detailed development process to identify what consumers like and understand.

Many of the problems with the current GFE, such as not having a place for seller credits, and no place to show total cash to close, are solved with the LE. The new Closing Disclosure actually provides columns for numbers that have been hidden off to the left side of the HUD-1 since 1974. The order of the information on both forms is a specific design to present information in a format that customers understand. Use it and sell it the way it was designed to be used.

Negative messages about the new disclosures will ripple throughout the loan process, make their way to the consumer and then reflect poorly on the company. Knowing and embracing the benefits will be a key factor in successful implementation.