TRID, Loan Package Documentation Nearly 70% of Reported Defects

ACES Risk Management, Pompano Beach, Fla., said nearly 70 percent of loan defects reported in 2016 involved issues related to the TILA/RESPA Integrated Disclosure rule and/or loan package documentation issues.

The company’s Mortgage QC Industry Trends Report for the fourth quarter and calendar year 2016 said its benchmark Critical Defect Rate increased slightly, from 1.27 percent in the third quarter to 1.50 percent in the fourth quarter. Purchase transactions among the subject group comprised 51 percent of the benchmark data, up from 48 percent in the previous quarter.

“The data suggests lenders are getting more adept at complying with critical TRID-related issues,” said Phil McCall, COO of ARMCO. “However, new areas of concern are beginning to spring up and an early correlation can be linked to a more purchase-focused market.”

McCall said lenders need to learn from their own defects if they want to protect themselves against compliance-related issues, “but they also need to stay apprised of changing trends if they want to mitigate the increased risk of fraudulent activity that is inherent with a purchase-driven market.”

The ACES Analytics benchmarking dataset includes post-closing quality control data from over 65 lenders, comprising more than 75,000 unique loans selected for random full-file reviews.