Some people consider the Consumer Financial Protection Bureau’s (CFPB) TILA-RESPA Integrated Disclosure (TRID) rule burdensome, and some people even jokingly refer to the acronym as “The Reason I Drink.”
But for others like eLend — a company that uses technology to simplify the mortgage process — TRID is an opportunity.
The two-year-old division of Parsippany, N.J.-based mortgage lender American Financial Resources recently launched Rate My Rate, a free online tool that enables mortgage applicants to upload a Loan Estimate received from one mortgage lender and compare it to a loan that eLend may offer.
The point of Rate My Rate
“What we wanted to do was create what the CFPB wants in creating its customer-facing initiatives,” said Robert Pieklo, chief strategy officer and executive vice president of eLEND.
“The CFPB wants consumers to compare Loan Estimates, not just go with the favored referral source of a real estate agent that has a marketing service agreement with them or who is in the office a lot. Studies have shown that more than half of people who start a full mortgage application only consider an estimate from one mortgage company. They don’t look for anyone else, but what they should be doing is getting at least three referrals from a real estate agent.
“We want to empower consumers to take their time and compare estimates so they can find a good loan deal.”
Where can you find it?
Rate My Rate is available on eLend’s website, elend.com, in a section on the homepage titled, “Already have an estimate from another lender? Upload your Loan Estimate, and receive an eLEND comparison in minutes.” Users upload their Loan Estimate in photo or PDF form using any Android or Apple device.
ELend’s patent-pending comparison tool reads the information off the consumer’s Loan Estimate and feeds it into eLend’s pricing engine. Rate My Rate then displays a comparison of its Loan Estimate and the original Loan Estimate across several categories, including closing costs, note rate, annual percentage rate, down payment or cash-to-close and credit score.
“We want to provide consumers with an opportunity to assess what kind of deal they are currently getting,” Pieklo said. “Even if we’re not better, at least you know you are getting a good deal. All we want is for the borrower to take a look and get that peace of mind.”
How agents can use it
Because the tool was just released in the last month, eLend does not have any data showing how often consumers decide to accept one of its loan offers over their original Loan Estimate.
However, Pieklo said he hopes real estate agents will embrace Rate My Rate because it will help them better serve their clients’ best interests. Agents can recommend a few local lenders, but then say, “by the way, here is eLend, feel free to get other quotes,” Pieklo said.
“We understand that real estate agents want to get the transaction closed. But what we feel and see in the industry is slightly disturbing,” he said.
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“There are more marketing efforts and payments going back and forth through different MSAs [marketing service agreements], and some seem focused on everyone but the borrower. If you are a real estate agent who is doing a fantastic job, you should be doing everything you can to uphold your financial responsibility to people who are purchasing homes.”
Pieklo said millennial borrowers may find the tool especially appealing, because studies have shown that the under-35 set are thrifty, resourceful shoppers.
“Millennials are very tech-savvy and know how to shop for something,” he said. “These are the same customers who walk into Best Buy to look at a $1,400 TV and then go and order it for $1,100 from Amazon.
“And if you think about it, why would you take only the advice of somebody whose entire income is based on commissions received if the transaction closes? If it were me, I would want to double-check.”
