Monthly Archives: April 2018

Shark Tank Success Stories

I love tuning in to “Shark Tank” every week for my fill of inspirational founder stories and entertaining investor personalities, but one of my favorite parts is seeing the updates on past deals.

For many of the entrepreneurs, appearing on the show is a pivotal turning point. Unlike a lot of reality television in which the content is staged, it’s not just for the cameras when they shake hands with a Shark. Afterwards, they work together to put their money where their mouth is and create thriving businesses, and there’s no better example of the show’s power than the following companies.

These products have become household names, and they have the sales to prove it. As you’ll see, even though they share the common ground of “Shark Tank” beginnings, there is no formula or recipe for the type of business that does well on the show.

Get inspired by some of the most successful companies that landed deals on “Shark Tank” below.

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Scrub Daddy

The Scrub Daddy is soft in warm water, firm in cold water, and can be used for the toughest household cleaning situations. This versatile sponge premiered in Season 4 and remains the most successful “Shark Tank” products to date. What originally started as a sponge designed for auto body shops and mechanics led to QVC appearances, a deal with Lori Greiner, and more than $100 million in sales.

Scrub Daddy (4-Pack), $14.24, available at Amazon

Scrub Daddy, $3.59, available at Target


For something you probably wear every day, regular socks have a lot of annoying problems, and investor Daymond John agreed. Bombas makes comfortable socks with extra-long staple cotton to keep them breathable, extra cushioning where your feet need them the most, and a blister tab.

The company made $50 million in 2017, which is great news for its community partners as well: for every pair purchased, it donates a pair to a homeless shelter or community organization. Bombas has donated more than 7 million pairs to date.

Shop men’s, women’s and kid’s socks at Bombas here

Tipsy Elves

Robert Herjavec’s $100,000 investment in ugly sweater company Tipsy Elves in 2013 has turned into more than $50 million total sales since. In addition to festive sweaters, it also makes ski gear and costumes that are sure to turn heads and attract some compliments. If you watched the 2018 Winter Olympics, you might’ve caught a glimpse of Jamaica’s bobsled team wearing custom Tipsy Elves warmup suits.

Shop Tipsy Elves apparel on Amazon here

Squatty Potty

The Squatty Potty, a stool placed under your feet to help you do your business, resonated with Lori Greiner and was an instant hit with viewers, selling $1 million in product within 24 hours of its Season 6 “Shark Tank” debut. Sales of this simple product were expected to hit $30 million in 2017.

Squatty Potty The Original Bathroom Toilet Stool 7″, $24.99, available at Amazon


Architecture students Andrea Sreshta and Anna Stork developed LuminAID after seeing the devastation of the 2010 Haiti earthquake. This solar inflatable product provides a source of light in any situation, including outdoor activities like hiking and camping. All five Sharks were interested in this potentially life-saving light, but the founders ultimately struck a deal with Mark Cuban.

Through its Give Light, Get Light program, the company gives LuminAID lanterns to charitable partners for disaster relief. Most recently, it donated thousands of lanterns to Syrian refugees and Puerto Rico hurricane relief.

Shop LuminAID lanterns, starting at $19.95, on Amazon here


Mobile app Groovebook provides an easy way to print your favorite phone photos on to a custom monthly photo book. For $3.99 a month, Groovebook sends you a 4″x 6″ photo book with perforated pages that you can tear out and share with anyone.

In 2014, just eleven months after the husband-and-wife founders Julie and Brian Whiteman made a deal with Mark Cuban and Kevin O’Leary, Shutterfly bought the company for $14.5 million.


Hanna and Mark Lim are parents who were inspired by their nine-month-old daughter’s ability to drink from a straw. None of the current sippy cups with straws were effective enough or made from safe materials, so they made their own, the Lollacup. Since partnering with Mark Cuban and Robert Herjavec, the company has passed $2 million in sales and expanded into other infant and toddler goods under the brand name Lollaland.

Lollaland Lollacup, Red, $15.95, available at Amazon


Founder Rick Hopper’s patented magnetic solution to the all-too-common and expensive problem of misplaced eyeglasses was a hit among his friends and family, and ultimately won over Lori Greiner on Season 3 of the show. It’s a subtle replacement for ugly glasses straps and can also be used for IDs or earbuds. The company has made more than $8 million in total sales since appearing on “Shark Tank.”

ReadeREST Stainless Steel, Twin Pack, $16.50, available at Amazon

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Disclosure: This post is brought to you by Business Insider’s Insider Picks team. We aim to highlight products and services you might find interesting, and if you buy them, we get a small share of the revenue from the sale from our commerce partners. We frequently receive products free of charge from manufacturers to test. This does not drive our decision as to whether or not a product is featured or recommended. We operate independently from our advertising sales team. We welcome your feedback. Have something you think we should know about? Email us at

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I tried Veestro, a plant-based meal delivery service — and it’s great for busy people who want to eat healthy

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The best women’s rain boots you can buy


What Does a Mortgage Loan Processor Do ?

Mortgage loan processor: definition

The mortgage loan processor is the link between you, your loan officer and your underwriter. And he or she is arguably the most important member of the team.

Many processors take your application so you don’t have to fill out forms

Processors pull all the pieces together – they may order open escrow, appraisals and inspections, pull credit reports, verify your income and document your assets

Processors submit your application package and follow up on requests from the underwriter

Of course, every lender has its own process and its own rules for processors.

Verify your new rate (Apr 22nd, 2018)

Mortgage loan processor roles

The National Association of Mortgage Processors says, “The primary function of the Loan Processor is to ensure the timely and accurate packaging of all loans originated by loan officers.” So it’s mostly an administrative role.

How do I know that I’ll be approved for a mortgage?

Mortgage loan processors typically:

Collect and collate all the information needed to approve a loan and make informed decisions concerning an application

Input that information into the lender’s IT systems

Verify information through documents you supply

Make third-party checks with credit bureaus, employers, accountants and so on

Order an appraisal of the home

Obtain title insurance and flood insurance (if needed)

Ensure the compliance of your case with regulatory requirements and internal policies

Order the final loan documents

Ensure the loan stays on track to close on time

Schedule appointment for closing

You can usually expect a mortgage loan processor to be involved throughout the application process: from pre-approval to closing.

Working with your loan processor

Some lenders see loan processing as an entirely “back-office” function. You may never even meet your processor and your only contact may be your loan officer.

However, other lenders encourage direct contact between processors and applicants. So what should you expect if you get a call or email from yours?

Mortgage closing: What happens at your signing?

What you should hope for is someone who’s an expert administrator with a focus on moving your mortgage application through the system in a timely way. In this sense, your processor’s goals overlap perfectly with yours.

Seeing it from your processor’s point of view

However, you risk coming into conflict over the minutiae of your case. You can’t understand why she’s so insistent on receiving January’s bank statement and last month’s pay stub (you know they’re somewhere) so urgently. And she can’t understand why you don’t just get on and send them.

The fact is, your processor is responsible for ensuring your application complies with a whole raft of external regulations and internal policies. And it’s highly unlikely she personally will have the discretion to overlook any compliance requirements.

Advantages of a good relationship

Having said that, a processor often has some workarounds. He might suggest an alternative that might get you out of a hole. For instance, it can be difficult proving that you’re receiving alimony if you don’t deposit it separately or keep copies of the checks. And who wants to have to ask their ex for canceled checks?

A processor may find a way around this, ordering copies of the actual deposits from your bank. So you need him on your side. The last thing you want is to be deliberately unhelpful or gratuitously rude.

In fact, building a good working relationship with her can help you. You want her to see you as a person rather than a case number each time she picks up your file. Even the most objective professionals work harder for those they like.

Self-help for mortgage applicants

Of course, the easiest way to get your mortgage loan processor to like you is to cause him as few headaches as possible. You can do that by supplying all the documents he needs upfront and anticipating any queries that might arise from them.

How to rush your mortgage to the closing table

No matter what sort of mortgage you’re applying for, your lender will want to satisfy itself over six areas of your life. It will need documents to support claims you make about your:

Identity — Photo ID, social security number, past residential addresses

Employment history and income stability

Credit and debt management ability

Expenses, payments and account balances

Assets, including cash, retirement and investment accounts

The source of funds for your down payment, if purchasing

Be prepared

Your lender will get your credit reports and scores itself. But you’ll be expected to supply it with the paperwork it needs to verify the other information.

You can do yourself a big favor by pulling together all the documents you’re going to need before you make your application for either a mortgage or pre-approval. It’s one less thing to worry about later when you’ll be under pressure. And it will give you a chance to get copies of anything that’s been lost in your filing system.

The documentation required for today’s best mortgage rates

Be patient

The extent to which lenders will crawl over your personal finances can feel intrusive. And their tick-box systems can feel overly rigid and bureaucratic. But remember:

You’re asking to borrow a huge amount of money so it’s only reasonable they’ll want to know all about you

They may not be asking for themselves. They often have to comply with third-party rules from regulators or loan guarantors, such as Fannie Mae, Freddie Mac, the VA, the FHA and so on

Their main objective is to make sure you can comfortably afford payments on your new mortgage and won’t get into financial trouble later

Your best way to navigate through this stressful time is with Zen-like calm. Taking out your irritation, resentment or frustration on your mortgage loan processor is unlikely to help.


Quicken Loans – A Data Acquisition Business ?

Quicken Loans executives speak at mortgage industry conference in Detroit.

Gilbert says Quicken Loans is more of a “data acquisition business” than mortgage company.

Emerson: Young consumers won’t change how they make purchases with smartphones.

Quicken Loans Inc. founder Dan Gilbert is a mortgage mogul.

Except he doesn’t view his business that way.

“We’re not really in the mortgage business. We’re in the data acquisition business,” Gilbert said Tuesday at a Mortgage Bankers Association conference at the Detroit Marriott at the Renaissance Center. “We acquire data, we curate it and we move it. That’s all we do.”

Gilbert and Quicken Loans’ vice chairman, Bill Emerson, shared the stage Tuesday morning at an opening session of their industry group’s conference, talking about how they see their business differently than its traditionally viewed by outside observers.

They talked about Quicken Loans’ transformation from a paper-intensive residential mortgage business in the 1980s and 1990s — then known as Rock Financial — to a tech-driven company based in downtown Detroit that has leveraged the internet to sell and service home loans faster and at rapidly increasing volume.

Quicken Loans has climbed to the top echelon of the mortgage business, claiming to top, for the first time, industry stalwart Wells Fargo & Co. in volume of mortgage originations in the fourth quarter of 2017. First-quarter 2018 mortgage origination data is not yet available, but Emerson suggested Tuesday that Quicken Loans would retain the top spot in the direct retail mortgage sector.

Without naming competitors, Gilbert said the ability to use a smartphone to make a major purchase like a home threatens the business model of legacy companies and industries.

“If they don’t get on the train, it’s going to be over,” he said. “The writing’s on the wall, right?”

In the future, Gilbert said, the only businesses that will survive are those that “keep up with the speed of the game,” invest time and capital in new ideas and “let people fail.”

“We’re seeing it already,” Gilbert said.

Emerson, who joined Gilbert’s company in 1993, took out his iPhone and noted the smartphone has all of the functions of multiple machines “that Radio Shack would sell — clocks and phones and computers and calculators” to customers just a decade ago.

Radio Shack, which went through bankruptcy 2015 and shuttered nearly all of its stores a year ago, is an obsolete way to shop for the average first-time homebuyer who is 32 years old, Emerson said.

“They’re not going to change the way that they purchase things, they’re not going to change what they do with this little device,” said Emerson, who spent 15 years as CEO of Quicken Loans until becoming vice chairman in February 2017. “If we don’t, as an industry, embrace this, get our brains around it … we’re out of the game.”


House Flipping is Back !

Amid saguaro cactuses and yucca plants, Lauren Rosin shows off a house that she’s renovating in Phoenix’s Central Corridor, a pricy neighborhood north of downtown.

“This was actually a courtyard and I blew it out,” she says, pointing to what will now be an extra-large open kitchen with custom cabinets, quartz countertops and chandelier-style lighting. She’ll also upgrade the swimming pool in the backyard.

But Rosin won’t live in the four-bedroom, three-bath midcentury ranch once it’s finished. She and her business partner Brad Pickett are house flippers: Pickett buys the homes, and Rosin leads a crew of contractors to rehab them. They flipped 27 homes last year.

These days, profits are tight, and they face stiff competition.

That’s because a decade after the U.S. housing bubble burst, house flipping is on the rise again. Defined as reselling a house within a year of purchase, flipping is at an 11-year high in the United States and it’s the subject of dozens of TV shows and weekend workshops promising to teach real estate novices how to make a fortune.

New research shows that flippers contributed to the housing crash of the mid-2000s more than economists initially realized. Because some of the same practices from the boom are making a comeback, some market watchers are concerned that the real estate market might once again be nearing a bubble.

But for now, experts say those concerns are overblown, thanks to changes in the mortgage industry and other factors.

The last time this many homes were being flipped was during the housing bubble. Flipping peaked in 2005, when 8.2 percent of all single-family homes sold nationwide were flips, about 344,000 homes, according to Attom Data Solutions, a research firm that collects and analyzes nationwide real estate data.

In areas where the bubble was growing fastest, flip rates were even higher. In Las Vegas and some parts of Florida, the flip rate reached nearly 19 percent. In Phoenix, about 16 percent of homes sold were flips.

A look at the market in Phoenix, considered a bellwether by industry experts, is a good way to see how things have changed or not. More than 8,500 homes — or 8.5 percent — sold in the Phoenix metropolitan area last year were flips, more homes than anywhere else in the country, according to Attom.

Before the crash a decade ago, flippers didn’t need to do much to make money. Financing was easy to get; people with high credit ratings could use no-income, no-asset loans to buy real estate. The housing bubble was inflating so fast, investors could buy, hold — sometimes renting out the properties to make a bit extra, sometimes renting at a loss, sometimes not even bothering to rent — then sell, over and over again.

Then the floor fell out from under the housing market.

Lauren Rosin got into flipping in 2009, during the bust. In Phoenix, the crash was disastrous. Homes on average lost 56 percent of their value. Lenders foreclosed on tens of thousands of families.

To Rosin, the wave of foreclosures meant that there were thousands of houses on the market that needed only a face-lift to net her a tidy profit.

“It was really sad because you’re watching so many friends and family go through losing their homes,” she says. “But I just looked at it as such a great opportunity.”

Ten years into her career flipping houses, Rosin’s operation is much more streamlined and professional. But it’s harder to make money now, she says.

Her profit margins are significantly thinner, typically 10 to 15 percent of the eventual sales price. She has to know exactly which amenities will yield more profit and which to skip, and the fine line between upgrading and going overboard.

New research and data suggest that the practices of house flippers fed the bubble of the early 2000s. Much of the blame for the housing crash has fallen on subprime borrowers and people who bought and lived in homes they couldn’t afford.

But researchers are now coming to understand that a big part of the problem was people with better-than-average credit scores who owned multiple homes — not subprime buyers, but real estate investors, landlords and flippers.

Stefania Albanesi, an economist at the University of Pittsburgh, argues that the rise in mortgage defaults during the housing crash was mostly attributable to real estate investors, including flippers.

During the bubble, about two-thirds of home flips nationwide were financed with loans, according Attom. In places like Phoenix and Florida, that number approached 80 percent.

The problem with that, Albanesi says, is that real estate investors such as flippers are at greater risk of defaulting on their mortgages than normal homeowners.

“If you lose your home that you’re living in, you have to relocate your family, find other housing, and maybe have a longer commute,” Albanesi says. “This is not something that’s there for the investor. Overall, their default probability is much greater.”

Normally, people with above-average credit scores are unlikely to default on their mortgages. But during the crisis, Albanesi’s research shows, it was borrowers with good credit scores who had taken out mortgages on additional properties — mostly investors — who defaulted at historically high rates.

“These borrowers looking to buy their second, third and fourth homes would tend to go to unconventional lenders and would tend to obtain loans through nonstandard products such as adjustable-rate mortgages and so on,” Albanesi says. “These loans are more expensive. They have higher interest rates. And so, other things equal, it’s more likely that these borrowers might default.”

Despite the volatility they can bring to a market, flippers can and do bring value. Many homebuyers don’t have the energy, resources or know-how to renovate a home that needs it. Flippers can help boost the supply of “move-in ready” homes.

“I don’t think there’s anything inherently wrong with flipping itself,” says Steve Swidler, a finance professor at Auburn University. “In fact, flipping has probably given life to the housing markets that were most hurt back in the financial crisis itself.”

Now that the real estate market has stabilized, flippers can’t ride the bubble or scoop up foreclosed properties on the cheap. They have to add real value to turn a reliable profit.

At the height of the bubble in Phoenix, the typical flipped home was originally constructed in the mid-1990s, according to Attom. In other words, people were flipping properties that were only about 10 years old.

Now, the average flipped property is typically about 30 years old.

“They’re older homes, which inherently are going to require more work,” says Daren Blomquist, senior vice president for communications at Attom. “They’re going to actually have to improve the conditions of these homes, which I think is healthy for the housing market. Flippers can step in and actually provide inventory of homes that are somewhat ‘like new’ if they do a good job.”

In areas that didn’t experience the housing bubble as intensely as places like Phoenix, Las Vegas or Florida, flipping rates have stayed more stable, growing slowly over time instead of swinging wildly from boom to bust.

But as flip rates in cities like Virginia Beach, Va., Baltimore and Birmingham, Ala., near 10 percent, some wonder if there is cause for concern.

Real estate experts in Phoenix, where these risk factors are ahead of national levels, say there’s no reason to sound the alarm yet.

During the housing boom, prices were rising so quickly that inexperienced real estate investors could turn a profit despite their lack of expertise, says Mark Stapp, who teaches real estate development at Arizona State University.

“Today, you can’t. It’s harder,” he says. He points to financing and commercial lenders. During the bubble in Phoenix, more than 75 percent of flips were financed with loans. Now, flippers in the area acquire about half their homes with financing, half with cash.

“Commercial lenders have been very disciplined,” Stapp says. “The loan-to-value, loan-to-cost, those kind of metrics, they’re keeping very low and tight control over. The issues we had previously with abuse through manipulating appraisals, that isn’t really happening.”

Simply put, Stapp says, though some of those inexperienced flippers are back, they’re still too small a portion of the market to worry about.

“I think it’s such a small number,” he says. “I don’t think it’s to the point where it so dramatically affects the market that the market gets hurt by it.”



Inside Scoop on Your Mortgage Lending Competition – FINTECH

A shrinking inventory of affordable housing and rising mortgage rates are making the real estate market even more competitive for homeowners. Those looking for an edge may want to consider getting a loan from a financial technology startup, otherwise known as a fintech.

A new report from the Federal Reserve Bank of New York and New York University issued by the National Bureau of Economic Research found that technology-driven lenders have created efficiencies in the home lending business that give them an edge over traditional lenders. These fintechs are able to process loans quicker, can better handle movements in demand and have fewer loans that end up defaulting. They are also gaining on their traditional brethren, with the study finding that fintech lenders’ market share jumped to 8% in 2016 from 2% in 2010. In 2010, the fintechs originated $34 billion in mortgages. That stood at $161 billion as of the end of 2016. A lot of the growth came from Federal Housing Administration loans.

[Check out Investopedia’s mortgage calculator to find out how much home you can afford.]

In terms of their ability to process mortgage loans, the research revealed that fintechs are doing so about 20% quicker than traditional lenders. “Faster processing does not come at the cost of higher defaults. Fintech lenders adjust supply more elastically than other lenders in response to exogenous mortgage demand shocks, thereby alleviating capacity constraints associated with traditional mortgage lending,” wrote the New York Fed and New York University in the report. “In areas with more fintech lending, borrowers refinance more, especially when it is in their interest to do so. We find no evidence that fintech lenders target marginal borrowers. Our results suggest that technological innovation has improved the efficiency of financial intermediation in the U.S. mortgage market.”

The researchers found that around 25% of mortgages issued by fintechs defaulted, which is lower than the industry average. That derails the argument that fintechs engage in lax screening of borrowers and actually implies they are attracting and providing home loans to borrowers who are less risky.

As for who is taking out a mortgage with a fintech over a traditional lender, the study found that the borrowers tend to be from more educated populations and are older, which may be surprising but could be because they are more familiar with the process of getting a mortgage and thus require less hand-holding. What’s more, the study found no evidence that fintechs are going after marginal borrowers and reported that there is no digital divide in mortgage lending.

“Recent technological innovations are improving the efficiency of the U.S. mortgage market. We find that fintech lenders process mortgages more quickly without increasing loan risk, respond more elastically to demand shocks, and increase the propensity to refinance, especially among borrowers that are likely to benefit from it,” wrote the researchers.


Maybe You Should Contribute to Your Borrower’s Closing Costs

While it’s not quite the same as the down payment assistance that the government-sponsored enterprises used to allow, lenders now have a new way to help borrowers buy a home – closing cost assistance.

Fannie Mae announced this week that it will now allow lenders to contribute to borrowers’ closing costs, as long as the money is a gift and is not used towards a borrower’s down payment.

Over the last few years, Freddie Mac on a larger scale, and Fannie Mae on a smaller scale, allowed lenders to gift money to borrowers that could be used on their down payment on a 3% down mortgage.

Under the programs, lenders would “grant” 2% of the down payment to the borrower. Add that to the borrower’s 1% contribution, and you would have the 3% needed to qualify for the Fannie and Freddie programs.

These programs fell out of favor after some lenders began rolling the “grants” back into the loans themselves in the form of premium pricing, wherein the lender would charge a higher interest rate in exchange for the down payment assistance.

That raised some flags with the Federal Housing Finance Agency, which eventually led to Freddie ending the program last summer.

At the time, the FHFA told HousingWire that it was monitoring the situation and had some concerns about the risks associated with charging certain borrowers higher interest rates in exchange for down payment assistance.

The FHFA told HousingWire that it was concerned that those borrowers might end up paying more over the life of the mortgage than what the lender provided in assistance.

So, the down payment assistance programs ended, at least in terms of the 2% coming directly from the lender and needing to be repaid.

Recently, HousingWire exclusively reported that United Wholesale Mortgage would be ending its 1% down program, in which the lender was gifting the entire 2% of the down payment to the borrower and not pricing the gift into the loan.

But now, lenders who sell their loans to Fannie Mae can begin offering closing cost assistance to borrowers, under certain circumstances.

According to an announcement sent this week by Fannie Mae to lenders, the money must be in the form of a gift and cannot be subject to any sort of repayment requirement.

Additionally, the money must not be used to fund any portion of the borrower’s down payment. The money can be used for closing costs and fees only.

Fannie Mae also said that there is no limit on the amount a lender can give to a borrower, just as long as it does not exceed the total closing cost amount.

“We’re making it easier for borrowers to purchase a home by allowing lenders to fund closing costs and prepaid fees,” Fannie Mae Chief Credit Officer for Single-Family Carlos Perez said in a letter to lenders.

“While there is no limit to the amount of the lender-sourced contributions, the funds cannot be used toward a down payment, cannot exceed the total closing costs, and should not be subject to any form of repayment agreement,” Perez added.

Additionally, Fannie Mae notes in its lender bulletin that the closing cost assistance must come directly from the lender and cannot be passed to the lender from a third party.

And now, for the fine print, taken from Fannie’s lender bulletin:

The amount of the lender contribution should not exceed the amount of borrower-paid closing costs and prepaid fees. Otherwise, the amount of the contribution is not limited except when the lender is an interested party to a purchase transaction as defined in B3-4.1-02, Interested Party Contributions, and in that case, the interested party contribution (IPC) policy applies. Any excess lender credit required to be returned to the borrower in accordance with applicable regulatory requirements is considered an overpayment of fees and charges, and may be applied as a principal curtailment or returned in cash to the borrower.

A spokesperson for Fannie Mae told HousingWire that the program was previously available on a limited trial basis to certain lenders. But now, the GSE is making the option available to all lenders.

According to Fannie Mae, lenders can begin contributing to borrowers’ closing costs under those specified conditions immediately. The change goes into effect now.


What You Need to Know About TRID 2.0 Coming in October 2018

The amendments to the Know Before You Owe/TILA-RESPA Integrated Disclosure rule issued last month were a long time coming, but overall were worth the wait.

TRID 2.0 addressed many of the pain points that our industry has struggled with over the past two years. The new rule becomes effective 60 days after it is published in the Federal Register, but compliance isn’t mandatory until October 1, 2018.

From a Consumer Financial Protection Bureau-watcher’s perspective, it appears that the Bureau heard and responded to the mortgage industry’s concerns, but there are still a handful of large issues that remain. While the CFPB stopped short of immediately closing the “black hole” that generally prevents lenders from re-setting fee tolerances when a Closing Disclosure has been issued prematurely, it did issue a new proposed amendment to address this problem. Concerned about unintended consequences, the CFPB is asking for comments on the proposed “black hole” fix.

Having said that, industry reaction to TRID 2.0 was mixed. Some lenders expressed disappointment that additional cure provisions for violations were not included, while secondary market investors were pleased that TRID 2.0 addressed many ambiguities in the original rule that could potentially create assignee liability.

Probably the strongest negative reaction came from the title industry. Michelle Korsmo, the American Land Title Association CEO, opined in a press release that the rule still results in consumers not receiving accurate information about title insurance costs. She stated, “While the CFPB’s disclosures have helped homebuyers better understand their mortgage costs, consumers would value their disclosures more if the CFPB showed the accurate costs of title insurance instead of the incremental costs.”

Here are some of the more significant changes contained in the 560-page TRID 2.0 document:

–Clarification of “no tolerance fees.” The new rule makes it clear certain products and services, such as property insurance, impound and escrow amounts, are still excluded from zero and 10 percent tolerances, even if they are paid to an affiliate of the lender. The only caveat is that the original estimates can’t be unreasonably low. Also, the preamble to the amended rule reaffirms that “typographical errors regarding a settlement service…do not subject the charges for such a service to the zero percent tolerance category…” in most instances.

–Construction loan disclosures. The Bureau made a number of additions to Appendix D, and clarified how construction loan inspection and phase-specific fees should be disclosed before and after the project is completed. If the fees are collected after the project is completed, they must now be disclosed in an addendum to both the Loan Estimate and the CD. Additional clarifications were also made regarding how construction costs, existing lien payoffs and unsecured debt payoffs are disclosed.

–Written List of Providers. The CFPB said that changes could be made to Form H-27 without losing safe harbor protections. The amended rule also clarifies when a service is considered “shoppable.” In addition, the Bureau said that a WLP may exclude a list of fee estimates not required by the lender, such as title search, notary, and fees for other administrative services.

–Re-disclosures after Rate Lock. A lender must issue a revised LE after the interest rate has been initially locked if no CD has been issued. Once a CD has been issued, the lender must issue a revised CD if the rate lock makes the CD inaccurate.

–Cost reductions after initial LE. The Bureau clarified that cost reductions of certain items don’t automatically reset tolerances. Tolerance determinations are based on comparisons between “the charge paid by or imposed on the consumer” versus “the amount originally disclosed” or a revised estimate.

Based on our discussions with clients, the overall reaction to these changes seemed to be positive. However, many clients are still working their way through the documents and probably won’t start implementing these changes in their systems and workflows until after the deadline for the GSE’s Uniform Closing Dataset compliance has passed.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at; or Michael Tucker, editorial manager, at


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