Inconsistent mortgage disclosure

One of these mortgage disclosures is not like the other

Settlement statements may be a source of compliance risk for investors

In the two years since TRID was implemented, many settlement agents have begun creating settlement statements (in addition to the similar closing disclosure document created by the lender), which can lead to inconsistencies across mortgage documents. More isn’t always better—or more accurate.

Why are settlement agents doing this? The ATS Secured Mortgage Investor White Paper offers one explanation:

“[M]any state laws require title and settlement agents to charge and disclose title insurance premiums based on rates that are filed or promulgated with the states. The calculations under TRID do not match the actual costs based on these filed or promulgated rates, so many title insurance companies use the separate settlement statement to disclose actual costs of title insurance and demonstrate that they complied with state law.”

That’s all well and good. However, in attempting to be compliant with state law, settlement agents may be inadvertently creating aberrations comparative to the closing disclosure—and in the process, becoming non-compliant with TRID.

There are a number of other risks associated with disconnecting the payment instructions from the actual payments, including fraud and errors in the disbursement.

The danger of non-compliance is also heightened when different parties also use different systems and tools, as participants do not have the ability to verify whether each other’s data is correct. Redundant data and effort also introduce more opportunities for error.

The ATS Secured platform empowers settlement agents to perform fully electronic disbursements that prevent fraud and increase data accuracy—without additional paperwork.

Contact us today to learn more.