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FOS Blog

10 Feb

Trid in the Rearview Mirror

Now that implementation is history and banks have a few TRID loans under their belts, it’s time to circle back and make certain that all the bases are covered. You’ll want to be well prepared to answer those auditor and examiner questions about your Compliance Management System (CMS). Here are some things to consider…

  • Rate Lock – If you are checking “yes”, do you have a signed rate lock agreement
  • Estimated Taxes, Insurance, and Assessments – If you are including non-escrowed items, can you prove this calculated payment through some type of supporting evidence?
  • Other Costs – Are you including “optional” in the description of fees that are at the borrower’s option?
  • Some vendors did not initially include the “Payoffs and Payments Table” with the Loan Estimate. Do you have documentation to prove how the “Estimated Total Payoffs and Payments” figure was derived on your Loan Estimate?
  • Comparisons Table/In 5 Years – Do you have supporting documentation to prove the total paid in principal, interest, mortgage insurance, and loan costs? This is more than simply a P&I calculation. What loan costs are you including?
  • APR – How do you validate the Loan Estimate APR when it differs from the Closing Disclosure? What supporting documentation do you have to support finance charges and the amount financed? This evidence that was previously disclosed on the Preliminary TILA Disclosure is no longer apparent.
  • Are you including the Amortization Schedule in your file documentation? Much of the Comparisons Table supporting documentation and calculations depend on the Amortization Schedule.
  • When fields are blank on page 1 of either the Loan Estimate or Closing Disclosure (because of information overload) are you verifying that information is apparent on the addendum page?
  • Loan Calculations – Are you periodically sampling these calculations using APRWIN software to validate the accuracy of your software.
  • Tolerance – What was page 3 of the HUD1 showing the fee tolerance calculations between the Loan Estimate and Closing Disclosure is no longer provided – it’s done internally within your software. But what documentation do you have to prove that the “Lender Credit” in the “Total Closing Costs” table is correct? Are you periodically retesting tolerances to validate the functionality of your loan documentation system?

These are a few issues that we’re seeing in early TRID reviews. And management’s response is usually “The system does it.” We bring these things to your attention because management is responsible for the accuracy of these disclosures, must understand the functionality of their software, and provide data validation as to the accuracy of these disclosures. Call it “TRID – Phase 2!” But you will be asked!

For additional information contact the author Evelyn I. Dehmey at