Intercontinental Exchange (ICE) issued a white paper that examines expenses, known as fee cures, that are eroding mortgage lender profits.
The TILA-RESPA Integrated Disclosure (TRID) rule, also known as “know before you owe,” requires mortgage lenders to provide borrowers with a detailed accounting of costs and fees associated with purchasing or refinancing a home.
Any errors in the disclosure are the lender’s responsibility to detect and rectify – and they may be required to pay the difference between the disclosed and updated costs.
“With origination inching off a 30-year low, lenders need to be as efficient and detailed as possible. Every basis point counts,” Tim Bowler, president of ICE Mortgage Technology, said. “Unfortunately, fee cures and the costs associated with them – entirely preventable expenses – are contributing to the already ballooning cost to originate a mortgage.”
The paper, called “The hidden cost of fee cures,” looks at what lenders can do to avoid these fees.
It points out that failure to keep up with such changes can be an expensive proposition. It found that fee cures are cutting into origination revenue. An ICE review of nearly 90,000 mortgages found an average of $1,225 per loan wasted on fee cures and related expenses.
Not only is this a significant amount when extrapolated over a lender’s entire pipeline, but the prevalence of such cures is startling. The study also found that over a period of just six months, more than one out of every three loans reviewed for this study required some type of fee cure.
The white paper is available fort free download on ICE’s website.