The main goal of the new TRID (TILA-RESPA Integrated Disclosure) regulations was to make the home buying process simpler for consumers. And, according to new data from the Consumer Financial Protection Bureau, there’s more work to be done. Escrow amount-related issues are a major source of homeowner dissatisfaction with the origination, closing, and servicing processes, reports CoreLogic staffer Dominique Lalisse.
Almost 50% of all borrowers say they are only “somewhat familiar” with the amounts required at closing, according to the 2015 Annual Consumer Mortgage Experience, published by the CFPB in January 2015. And that percentage is even higher for first-time home buyers. This reinforces the need for home buyers to have clear disclosure of closing costs in the loan estimate.
It’s easy to see how these inaccuracies on annual tax estimations are driven by the lack of standardization in the origination and underwriting processes. From the moment a home is put on the market until the time the new homeowner’s mortgage is being serviced by the lender, up to six annual tax estimates are being completed with different levels of accuracy:
1. The real estate agent will list property tax information in the home listing
2. A potential buyer will research the property tax information to estimate overall annual costs for a property
3. The mortgage loan origination officer will research property tax information to complete the loan estimate
4. The underwriter of a loan will validate property tax information to assess the ability of the homeowner to repay the loan and estimate the amount required at closing
5. The closing agent will procure property tax information to prepare the closing documents
6. The servicer of the loan will procure tax amounts and due dates to set up escrow lines