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#1300862 - 12/08/09 04:51 PM
Re: RESPA required provider list
DD Regs
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Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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You only have to provide the name of the service provider for the required service. If there in no gas line inspection required then you do not need to provide a list for gas line inspectors.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1300874 - 12/08/09 05:05 PM
Re: RESPA required provider list
Dan Persfull
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Joined: Nov 2008
Posts: 4,132
Somewhere in the middle
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But couldn't we just provide a "blanket list" so that all bases are covered?
2nd question. We operate in three distinct markets. Two of them we want to control the title companies used and the third is a large metro area that we are OK with letting the borrower shop. Is it permittable to allow shopping in one market and not in another?
My thoughts would be when giving the GFE we say they can shop or can't depending on the market. Am I right in thinking this way?
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#1300986 - 12/08/09 06:23 PM
Re: RESPA required provider list
DD Regs
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New Poster
Joined: Nov 2009
Posts: 10
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Is there anything that states in the Reg what specific services we have to let the Borrower shop for? or is it at the Bank's discretion?
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#1301053 - 12/08/09 07:18 PM
Re: RESPA required provider list
HWood901
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Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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DD Regs.
You could give a blanket list, but what if you have nothing listed in that section for the particular service, therefore you didn't estimate a charge and the applicant decides to get the gas inspector because you gave them a list of services and providers they can shop for? Since you provided the list and basically estimated the charge at $0 would you not be subject to the 10% tolerance? I'm not sure you would be, but I'm not willing to take the risk this early in the game.
I know of no reason why you could not have different policies in different regions as long as they are documented and not based on any prohibited factors.
bluebear, unless there is a state law issue you can choose all service providers; providing they are not affiliates.
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#1321426 - 01/08/10 09:30 PM
Re: RESPA required provider list
DD Regs
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Joined: Apr 2005
Posts: 3,663
TN
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I'm not sure if this has been asked and can't find it in a search....
We have a controlled list of title companies. If we allow the borrower to shop, do we have to disclose our entire list on the referral list or is it permissible to only list one?
Thanks in advance!
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I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.
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#1321444 - 01/08/10 09:46 PM
Re: RESPA required provider list
David Dickinson
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Joined: Apr 2005
Posts: 3,663
TN
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Great! Thanks!
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I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.
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#1321619 - 01/10/10 04:42 PM
Re: RESPA required provider list
David Dickinson
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oHiO
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Is there a record retention requirement for the providers list? Good question. ยง3500.10(e) states the record retention of the Settlement Statement and related documents is 5 years. Reasons for a revised GFE must be kept for 3 years. But I don't see anything about the provider list. One could imply that it goes with the 5 year rule of the Settlement Statement, but I don't see it specifically mentioned. David- does the recommended provider list go in the loan file then or just given to the customer? Thanks.
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#1321849 - 01/11/10 04:49 PM
Re: RESPA required provider list
pjs
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100 Club
Joined: Mar 2008
Posts: 156
California
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I asked our attorney about the required provider list because we wanted to know how many providers we needed to list. What I found interesting is that he told me that because I would be subject to the 10% tolerance for any service where we listed the providers, we should use the one who charged the biggest fee. Now, #1: we want to be competitive if people are shopping so I don't want to disclose all the biggest fees available, and #2: doesn't that seem contradictory to the reason for all of this??? If a consumer uses your estimate and goes with your loan, they are mostly likely not going to go look at other service providers to see that they are getting the best deal. They are going to go with who you choose. This answer seemed like the consumer will be charged more rather than less due to the new form requirements.
Happy Monday. OY!!!
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#1321857 - 01/11/10 04:56 PM
Re: RESPA required provider list
AKA nan
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Bloomington, IN
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If you are only going to disclose one on the list then there is no need to disclose the highest fee because if they choose someone not on that list you are not subject to the 10% tolerance. Just keep in mind if the applicant does not choose and you choose a different provider than disclosed then you are subject to the 10% tolerance.
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#1325626 - 01/15/10 07:57 PM
Re: RESPA required provider list
rlcarey
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Joined: Nov 2006
Posts: 243
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Only putting one recommended service provider on the list makes no sense to me. Wasn't HUD's purpose of the tolerances to make sure that closing costs do not go up exponentially from initial disclosure to closing? However, if you only put one on the list and the customer doesn't pick that one, your fee can go up an unlimited amount which could be detrimental to the customer. Seems like HUD is shooting themselves in the foot on this one. Are ya'll sure that they will allow banks to only put one recommended provider on the list for services we allow the customer to shop for? That makes no sense to me........
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#1325715 - 01/15/10 08:25 PM
Re: RESPA required provider list
SuperBanker
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Joined: Jul 2002
Posts: 5,568
New Jersey
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I think that most of us have concluded by now that what makes sense, and what HUD intended, and what will actually happen are all different.  HUD does not specify a minimum number of service providers that must appear on the list. They simply state that you must provide a list of settlement service providers if you allow the applicant to shop for such services.
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#1325726 - 01/15/10 08:28 PM
Re: RESPA required provider list
Sinatra Fan
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The Swamp
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I don't see that as a real big deal. You list one provider and show that one fee (if you require that particular service on a given loan). Then, if the borrower wants to shop around, that's his perogative and it's in his control.
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#1332446 - 01/27/10 10:15 PM
Re: RESPA required provider list
David Dickinson
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Joined: Jul 2007
Posts: 320
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I'm thinking we will just do away with the provider list altogether and simply pick the settlement service providers for the loan.
The pros I see are: No need to maintain the list; we have a better idea of the fees; there wouldn't be any "changed circumstance" confusion, because the settlement service provider would be set, period.
The cons I see are: We'd be locked into the 10% category tolerance, we'd have the possible PR issue of explaining to the customer that they cannot shop for settlement providers, and we'd have to be sure to avoid any possible Section 8 referral problems.
Am I missing anything else?
I must say, the GFE seems to undermine banks that just select the settlement agent (even though we are allowed to do so), by using verbiage like Block 6: "We can identify providers of these services or you can shop for them yourself", and in the tolerance box descriptions at the top of page three, which repeatedly say "services that you can shop for". I think you have thought through this well. I don't think you're missing anything. Most of our clients have decided to just pick the providers too. I'm in MN, and the lenders in my bank seem to be having a disagreement regarding Title issues. Some are saying that we *have* to let the borrower shop, others say that we can pick if we want to. Any MN BOLers out there that can clarify this for me (and provide relevent statue if applicable)?
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#1332602 - 01/28/10 01:32 PM
Re: RESPA required provider list
David Dickinson
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Joined: Jul 2007
Posts: 320
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Thanks for the clarification, David.
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