We have had several instances here where borrowers are purchasing bank owned properties. Our lenders are giving GFE's based on our local rates, etc, however the LARGE banks that own these properties are telling our customers if they want to purchase these homes they must use a title company in Florida (and we are located in the upper Midwest). This would be fine, however the fees are much higher than our normal title fees and in some instances our loan officers aren't giving a shopping list as there is only one title company in town and they thought that was okay. But now with these Reposessed properties and the large banks stating my way or the highway, we are out of tolerance due to all the odd ball title fees and no way to recoup. HELP!!!

Have your customers show these banks the following and if they persist file regulatory and violation of law complaints against them.


Hud's Reg X

Sec. 3500.16 Title companies.

No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608). Section 3500.2 defines ``required use'' of a provider of a settlement service. Section 3500.19(c) explains the liability of a seller for a violation of this section.

§3500.19: Enforcement (04/01/08)

(a) Enforcement Policy. It is the policy of the Secretary regarding RESPA enforcement matters to cooperate with Federal, State, or local agencies having supervisory powers over lenders or other persons with responsibilities under RESPA. Federal agencies with supervisory powers over lenders may use their powers to require compliance with RESPA. In addition, failure to comply with RESPA may be grounds for administrative action by the Secretary under 2 CFR part 2424 concerning debarment, suspension, ineligibility of contractors and grantees, or under part 25 of this title concerning the HUD Mortgagee Review Board. Nothing in this paragraph is a limitation on any other form of enforcement that may be legally available.

(b) Violations of section 8 of RESPA (12 USC 2607), §3500.14, or §3500.15. Any person who violates §§3500.14 or 3500.15 shall be deemed to violate Section 8 of RESPA and shall be sanctioned accordingly.

(c) Violations of section 9 of RESPA (12 USC 2608) or §3500.16. Any person who violates Section 3500.16 of this part shall be deemed to violate Section 9 of RESPA and shall be sanctioned accordingly.

(d) Investigations. The procedures for investigations and investigational proceedings are set forth in 24 CFR part 3800.

And from the Act itself:

2608: Title companies; liability of seller (01/03/07)

(a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.

(b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.


(Pub. L. 93-533, Sec. 9, Dec. 22, 1974, 88 Stat. 1728.)



PS. Even if they go ahead and close I would make sure it was documented the seller required the use of the title company as condition of the sale and then file a suit against them. I would also be curious if they have an interest in the title company. Sounds like a Sec 8 violation could also be present.

Want to hear the real kicker? HUD requires a specific title company as well.

Pot...Meet Kettle.