econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 24 April 2016

Analysis Of Consumer Complaints And Mortgage Servicing Issues Related To Inaccurate Tax Estimates At Closing.

from CoreLogic

-- this post authored by Dominique Lalisse

The new TILA-RESPA (Truth in Lending Act/Real Estate Settlement Procedures Act) rule, referred to as TRID (TILA-RESPA Integrated Disclosure), focuses on increased quality and accuracy of information for settlement services. While these issues are important, transparency, speed and accuracy of escrow estimations remain key areas of opportunity to improve homeowners' experience as demonstrated by homeowner feedback and servicing issues.

Escrow amount-related issues are one of the major sources of homeowner dissatisfaction with the origination, closing and servicing processes, according to data from the Consumer Financial Protection Bureau (CFPB). Analysis of customer complaint data shows that a number of borrowers are dissatisfied with the inaccuracies associated with annual tax estimates as well as with settlement funds required at closing.

In the most recent survey, 2015 Annual Consumer Mortgage Experience, published by the CFPB in January 2015, almost 50 percent of all borrowers say they are only "somewhat familiar" with the amounts required at closing. And that percentage is even higher for first-time homebuyers. This reinforces the need for homebuyers 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

In all methods before closing, past amounts are generally used to determine the amount to be paid by the borrower. Inaccurate estimates could mean the borrower might actually be unable to afford the home or might require an escrow analysis in the first year of the mortgage. If the amount is significantly underestimated, the homeowner might face financial hardship which could have been avoided with a more accurate estimate early in the process.

A survey of a major national lender indicated that about 12 percent of loans will require a change - immediately after closing - in yearly escrow payments of $250 or more due to inaccurate tax estimates. Each change in a homeowners' escrow analysis not only increases servicing costs but also generates customer dissatisfaction.

The CFPB's website for borrower complaints has logged approximately 170,000 complaints and while most do not contain enough detail to point to a specific root cause, the chart shows the general breakdown of complaints received:

According to the data, approximately 32 percent of the complaints relate to loan servicing, payments and escrow accounts, and approximately 4 percent relate to the settlement process and costs. Both of these issues are directly affected by the quality of property tax information and estimates throughout the closing process.

The data reinforces the fact that improved accuracy, process standardization and transparency in the mortgage origination and underwriting processes will increase consumer confidence and satisfaction. By using more accurate annual tax estimates during the origination and underwriting processes, lenders will not only satisfy regulatory requirements, but also provide more transparent information and thus a quality experience for the borrower throughout the entire loan lifecycle.

© 2016 CoreLogic, Inc. All rights reserved.

Source

http://www.corelogic.com/blog/authors/dominique-lalisse/2016/03/new-mortgage-origination-rule-shines-spotlight-on-need-for-more-accurate-tax-estimates.aspx?WT.mc_id=crlg_160411_PsoGL#.Vwzy_DArKUk

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
The Expected Effects of Petitions to Improve the Monetary System
Energy and Falling Productivity
News Blog
October 2016 Economic Forecast: Outlook Insignificantly Declines But Little Economic Strength Entering 4Q2016
1 Minute. 34 Seconds. In The U.S., That's All It Takes To Register To Vote. A Single Registration Lasts A Lifetime Of Elections. We've Made It Easy For You Here: Http://g.co/elections/134
Durable Goods New Orders Unchanged in August 2016
90% Rally In Sugar Prices Since Late 2015
U.S. Real Wage Growth: Slowing Down With Age - Part 2 Of 2
Infographic Of The Day: Four Tips To Grow Wealth
Early Headlines: Asia Stocks Down, Yen Rises, Oil Soft, Wells CEO Gives Up Bonuses, Trump Didn't Want To Embarass Clinton, US Asset Bubbles, US Crime Rates Falling And More
What is Democracy, Anyway?
Transcript Of Elizabeth Warren Questioning Wells Fargo CEO John Stumpf
Documentary Of The Week: Elizabeth Warren Indictment Of Wells Fargo
Clinton Wins Round One
Why Alzheimer's Research Is Failing To Hit Treatment Targets
Voters Still Distrust Both Presidential Candidates
Investing Blog
Banks Of Absurdity
Investing.com Technical Summary 27 September 2016
Opinion Blog
Trump Stumped In First Debate With Clinton - Will It Cost Him?
Why All Banks Should Be Federally Owned
Precious Metals Blog
War On Cash Turns To $20, $50, And $100 Bills
Live Markets
28Sep2016 Market Close: Wall Street Closes Higher After A Sluggish Start In The Morning, Crude Prices Close Higher In Face Of GS Saying Crude Will Fall, Indicators Neutral
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved