With increased liability and enforcement by the Consumer Financial Protection Bureau, TRID is beginning to have a negative impact on the secondary market. Investors are cautious and rejecting loans in the post TRID world. Below is a list of some most common reasons loans are being rejected in the secondary market.
- Loan Estimate & Closing Disclosure being dated the same date.
- CD—the title fees not having “Title – “ in the description. (i.e. “Title – Settlement Agent Fee”). There have even been some issues with not having a space in between “Title” and the hyphen. The regulatory text has a space in the “Title -“.
- CD—All contact info not included on Page 5 (i.e. real estate agent/broker’s license number is missing). If the contact person (the individual, not the entity) is not required to have a License ID, the filed may be left blank. However, in regions where a license number is required it must be entered.
- CD on refinances does not allow a place to show subordinate financing. This is correct, for the alternative CD. The CFPB’s Office of Regulations stated in a webinar that if the alternative CD is used, there is no place to show subordinate financing on the alternative CD, and there is no requirement to do so. Essentially, each transaction will have its own cash to close, and the settlement agent has to figure out the “master” cash to close.
- CD—title company “file number” not included on page 1. The File # is the settlement agent’s file #, “for identification purposes." There is not a lot of guidance about this number. The commentary only states that it "may contain any alpha-numeric characters and need not be limited to numbers.”
- Lender/Bank sent the Loan file to the Investor with a copy of an executed 3rd party authorization to release NPPI form giving Realtor access to borrower’s CD.
- No seller’s CD. The rule requires the settlement agent to provide a CD to the seller. Many lenders have been reporting to me that the settlement agents they are dealing with are not providing the seller’s CD, or are providing the HUD-1 or ALTA Settlement Statement instead of it. The HUD-1 or Settlement Statement cannot replace the CD to the seller.
- Simultaneous Issuance. Lenders are quoting “old” rates and it does not match the “new” calculations thus causing a tolerance issue.
- Optional designation. The "(optional)" designation is not being used correctly. It’s used for separate insurance, warranty, guarantee, or event-coverage products disclosed under the “Other” category, such as optional owner’s title insurance, credit life insurance, debt suspension coverage, debt cancellation coverage, home warranties, and similar products.
- CD & LE: The Fee names. The fee names essentially should be the same between the LE and CD. If you did not provide the original estimates for the fees on the LE, then when you are selected as the title company/settlement agent, you can change the fee names, based on the changed circumstance. But from that time, or from the original LE if you provided the fee estimates for the LE, the fee names should be the same.