The new consumer disclosure rule known as TRID has increased origination costs for lenders, but at the same time has boosted borrowers' satisfaction in the loan-closing process, according to a new study.
The Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rules require an increased amount of information by borrowers. The large number of variables on home-loan application forms have made compliance difficult for lenders. The new rule took effect in October.
As a result, lenders' back-office fulfillment and post-closing costs have increased by an average of $209 per loan, according to a report Wednesday issued by Stratmor Group, a Greenwood Village, Colo., provider of mortgage data. Lenders have estimated that they can recover only about 17% of those costs by assessing additional fees.
The TRID rule has been cited as a factor in at least one mortgage lender's decision to exit the business. W.J. Bradley Mortgage Capital in Centennial, Colo.,
"Implementing TRID has obviously not been easy for lenders," Matthew Lind, senior partner and founder of Stratmor, said in a news release.
However, borrowers have cited an increased level of satisfaction with the new rule, as the number of borrowers who said they were contacted by their lender prior to closing rose from 85% to 91%, Stratmor said.
Stratmor's study also found that about 87% of lenders have completed implementation of the new TRID rule.
