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66 Legal Industry Update National Focus B Y D E B B I E H O F F M A N , D I G I T A L R I S K , L L C COMPLIANCE CONCERNS A summary of the mortgage industry during 2015 in one word is "TRID"; in two words, "TRID" and "Terror." As 2016 commences, TRID may still be at the forefront of the industry, but perhaps for a different reason. is epic regulatory implementation has brought an important topic to light: vendor management. Since even before the date of implementation on October 3, the CFPB has made clear that TRID violations are unacceptable and the parties responsible – both lenders and their vendors – will be held accountable. CONCERNS Lenders have voiced their concerns regarding TRID implementation, particularly for causing closing delays due to their current technology. Such lenders have claimed that closings have been drawn out to a sometimes 60-day-long process as a result of the TRID changes, which is much higher than the historical average of 42 to 47 days. However, the core of the problem is not the lengthening of the loan closing process, but rather the gaps in compliance brought on by updating current and implementing new vendor technology, as well as aligning partnerships with new technology vendors. According to a Moody's Investors Service report published on December 10, 2015, ninety percent of recent loans contained a TRID violation. Although the violations are largely technical, they could cause problems for a secondary market purchaser, particularly with a residential mortgage backed security, due to delays resulting from erroneous information. Most of the mortgages originated since TRID was implemented have some variety (whether material or not) of a TRID violation. ese violations can be attributed to poor TRID compliance efforts, which, in turn, can be traced back to challenges in partnerships between lenders and their technology vendors, and perhaps to new implementation of quality control processes related to TRID. Now, almost 100 days after implementation, evidence is building into a clearer picture that reveals technology vendor performance in supporting lenders through TRID changes is wrought with challenges. Technology vendors may not be completely to blame for the high rate of loans with TRID violations, but the industry needs to focus on vendors, partnerships, and strengthening technology processes. To be fair, lenders have also voiced concerns regarding the challenges they have faced with their vendor partnerships. ey too have noticed the same technological gaps and discrepancies that were found in Moody's Investors Service report. us, in addition to purchasing and training on the TRID software provided by their technology vendors, lenders must dish out further funding for quality control teams to QC loans or for consultants to help them bridge the gaps. TRID puts the spotlight on vendor management.

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