In a piece by Bill Smith posted on Housingwire, the effectiveness of the Disclosure Desk is put into question. In the beginning, disclosures were simpler with less data points. They could be automatically assigned and distributed to borrowers without the risk of inaccuracies. In 2010, the Good Faith Estimate and Truth-in-Lending were revamped with more demanding requirements, tolerances, and deadlines. This caused many lenders to ramp up their compliance departments and to create positions dedicated to reviewing documents prior to disclosure. With lenders unwilling to put their faith in their Loan Officer or available technology to ensure accuracy, these costly additions became the norm.
In today’s environment with Know Before You Owe, the problem has only grown worse. There may be a fear of adopting a solution and then the regulatory landscape changes drastically. Lenders feel they can rely on the Disclosure Desk model to ensure they only disclose accurate documents within the required timeframes.
In part 2 of the piece, Smith notes that among those in a survey group, the monthly cost of the disclosure desk ranges from $30,240-$70,560. Smith reports that a 60% waste rate calculates out to $319,932 annually. With all these costs, errors can still happen with an average of $35,800 in monthly cure costs.
There are solutions out there, such as the one mentioned in the article, but are lenders willing to trust technology over a living person? This has yet to be seen. Especially with the industry’s reluctance to hand over the reins in many parts of the loan process. Until the industry is comfortable with a solution that ensures accuracy of the loan file, the costs of these current inefficiencies will always be much less than a regulation violation and the bad press that follows it.