Our forms vendor is disclosing Block 4 of the GFE and Line 1101 (which we break out in lines 1104 and 1109 outside the columns)as follows in the comparison chart:
Block 4 = $400 Line 1109 = $200 Line 1104 = $200
We believe that the comparison chart should compare line 1101 to Block 4. They will not submit our request to their compliance department without a citation saying that the total of 1101 should be on the comparison chart rather than broken out fees. Anyone else have advice or dealt with this?
I believe number 8 on page 16 of the RESPA FAQ states that 1101 should not be broken out on the comparison chart. Am i reading this correctly and is this spelled out anywhere in the reg or appendices?
The Q&A you reference gives guidance how to disclose the fees when one provider provides title services and another provider provides settlement services. If you aren't using separate providers for these services the Q&A cited would not be applicable.
The opinions expressed are mine and they are not to be taken as legal advice.
We use an attorney for the title opinion and a separate company for title insurance. The total is in line 1101 and then broken out in 1104 and 1109 outside the column. How would this be disclosed on the comparison chart? Is there a citation I can reference?
Not necessarily, Dan. Specifically, in Iowa the attorney's opinion cost goes in Block 4 as outlined below: (I got this directly from HUD)
Question:Could you please provide some additional guidance for the following situation with regard to GFE – Written List of Providers specifically, how to show the fees outlined below on the HUD?
FAQ 4/2/10 – p.15 GFE refers to the ‘total estimated fees for “Title Services and Lender’s Title Insurance” combined in Block 4.
In Iowa, there are three distinct and separate providers required to obtain ‘Lenders Title Insurance”: • an abstractor who updates the abstract to date; • an attorney who reads the abstract and provides a title opinion; • Iowa Title Guaranty who provides a commitment to insure based on the title opinion.
Banks are giving written lists of providers for all three. My question is: how do I show the charges on the HUD if the borrower chooses an attorney who is not on the provider list?
RESPONSE: SEE PP. 14 – 15 ON THE FAQ’S FOR YOUR QUESTIONS; FOR EXAMPLE: 8) Q: In some cases, law or local custom may require, or consumers may prefer, to have one provider conduct the settlement and another provider perform the remainder of the services included within the ―Title Services and Lender‘s Title Insurance‖ category on the GFE (Block 4 on page 2). How should the fees and providers for these services be listed on the GFE, the Written List of Service Providers, and the comparison table on page 3 of the HUD-1 (page 2 of the HUD-1A)? A: The preferred method of disclosing the GFE Block 4 charges on the Written List of Service Providers is to list a set of single providers where each is capable of coordinating or performing all of the services provided within the ―Title Services and lender‘s title insurance‖ category. Due to a wide variety of practices across the country, an alternate option is explained below that allows for the separate identification of providers to conduct settlement (or closing) and providers of lender‘s title insurance and the related services on the Written List of Providers and the HUD-1/1A. GFE In all cases, the GFE shall be completed with the total estimated fees for ―Title Services and Lender‘s Title Insurance‖ combined in Block 4. Provider names are not listed on the GFE.
Written List of Providers For Block 4, the loan originator may separate the services in the Written List of Providers to show providers that conduct settlements (or closings) separately from providers of lender‘s title insurance and the related services If Block 4 services are separated on the Written List of Providers, the associated estimated fee for the component service must be listed next to the header for the list of providers of that service The sum of the estimated fees for the two services must equal the amount in Block 4 Only two (2) categories of service providers may be listed: providers that conduct settlements (or closings) and providers of lender‘s title insurance and the related services LAST UPDATE: April 2, 2010 16 HUD-1 page 3, HUD-1A page 2 If the consumer chooses neither service provider from the list: o The lump sum of Block 4 would be placed in ―Charges that Can Change‖ Both service providers should be listed in the blank for service provider names, for example: XYZ Settlement Services/ABC Title Agency If the consumer chooses a provider of one of the services from the list: o The service provider that was chosen from the Written List would be included in ―Charges That in Total Cannot Increase More than 10%‖ with the associated estimated fee from the Written List of Providers in the GFE column and the actual fees for that service from that provider in the HUD-1 column. The service performed by the provider not chosen from the Written List of Providers would be listed in the ―Charges that can Change Section‖ with the associated estimated and actual fees. o The total of the estimated fees in the GFE column (from both tolerance sections) must equal the amount in Block 4 of the GFE o The total of the actual fees in the HUD-1 column (from both tolerance sections) must equal the total of all ―Title services and lender‘s title insurance‖ actual charges If the consumer chooses the providers of both services from the Written List: o The Block 4 total is listed in the ―Charges That in Total Cannot Increase More than 10%‖ column. Both service providers should be listed in the blank for service provider names, for example: XYZ Settlement Services/ABC Title Agency The total estimated and actual fees for both providers would be listed in the respective GFE and HUD-1 columns.
9) Q: May a loan originator include an affiliated business on the ―written list‖ of settlement service providers that must be provided with the GFE? A: Yes. A loan originator may identify an affiliated business on the ―written list‖. The ―affiliated business arrangement disclosure‖ must be provided at the time the GFE is provided to the borrower or at the time of referral, whichever is earlier. 10) Q: Does the requirement for a ―written list‖ apply to Block 4, ―Title services and lender‘s title insurance‖ on the GFE? A: Yes. The loan originator must provide a ―written list‖ of settlement service providers, including providers of ―Title services and lender‘s title insurance‖ if the loan originator permits the borrower to shop for that settlement service.
A number of options have been suggested including: • the charge would be broken out on both page 2 and page 3; • the charge would remain lumped in on page 2 but broken out on page 3 in the HUD column only. The charge for items the bank chose would remain in the 10% section while the attorney fee would go in the Charges that can change section. • the charge would remain lumped on page 2 but a. the GFE column in the 10% bracket would be reduced by the amount of the attorney fee counted on the original GFE b. the attorney fee would be listed in the Charges that can change section with the amount deducted above shown in the GFE column. The total of a & b would equal the amount shown in Block 4 of the GFE. In this last scenario, actual costs would be shown in both sections in the HUD column of p3
That would be specific to state law requirements then. One is not required in IN and it would be part of the bank's origination charge if one was obtained because it would not be part of the title services provided by the title insurance provider.
The opinions expressed are mine and they are not to be taken as legal advice.
Sugarbaker, I think what's confusing you is that you're trying to compare a two step process to a three step.
In Iowa it's not just an attorney opinion and then title insurance. It's an abstract update, an attorney's opinion and then title guaranty. They're not putting the same charge twice. There are seperate charges for each of these items. 1109 shows the abstractor's fee. 1110 is the attorney's fee. 1101 is the total of 1109 + 1110 + title guaranty's cost.
Assuming you're not in Iowa, you're doing a two step process. Why you do the title opinion AND get title insurance is what I don't understand. The attorney opinion does the same thing the title insurance does EXCEPT provide insurance. It seems like a double whammy cost to your borrower.
Note: Not all Iowa loans use this three step process either. If the loan will be sold on secondary within 90 days, the borrower can opt for title insurance. If that's the case, you just see the total charge on 1101.
Our title company doesn't do a title examiniation that is why we have an attorney do one . . .we then send it to the title insurance company.
When I mentioned disclosing the same charge twice, ahkcompliance said they put the breakout inside the borrower's column as well as in 1101, if that is the case then the same fees show up in the borrower's column twice.