As explained in the first part of this article implementing the new integrated disclosures is a massive task. Lenders that have a plan and get an early start on the process will complete the task by the August 1, 2015 deadline with minimal stress to all involved. We advocate a three-step process for implementing the New disclosures.
- Master the Material – Mastering 1,888 pages of regulation and related material doesn’t happen quickly. Most of us need several exposures to the material to learn it thoroughly. Attend a comprehensive seminar to get a quick start on the process, and then engage in intensive self-study of the material. Once you have a firm grasp of the material you can master it by preparing the templates discussed in the second step of this process, and by teaching the material to others.
- Prepare Templates – For each regularly offered mortgage loan product (purchase, refinance, home improvement, second mortgage, fixed-rate, variable-rate, etc) prepare a Loan Estimate and a Closing Disclosure. These templates need to be perfect; agonize over the details. We suggest a tag team approach – one team member prepares the disclosures, the other picks them apart in an editing process. You will be amazed at how you really master the material through this process. You will also be shocked by the amount of detail is involved in proper completion of the forms and how easy it is to slip into a violation.
- Complete Implementation – This final step encompasses several tasks – policies, procedures, board approval, testing the Loan Origination Software (LOS), and training team members on the rules, procedures and use of the LOS. The templates prepared in step two will be useful in training and in testing the LOS. Run the same transactions used to prepare the templates through the LOS. The LOS should match the templates exactly, down to the smallest details.
There is nothing easy about implementing the new integrated disclosures. If you recall the difficulty of implementing the current GFE and HUD-1 in 2010, this new task is more of a challenge; the new forms are better, but the forms and the instructions are more complex. By carefully planning the process and getting an early start on the tasks, the implementation will be completed on time (assuming your vendor delivers a fully functioning, thoroughly tested LOS a reasonable time before the effective date – this is probably an unreasonable assumption).