Just want to get confirmation that my thought is correct:
If the bank receives $100 from the title insurance company for witness closings, this needs to be included in the "Points and Fees" calculation, correct?

If the bank receives $100 from the title insurance company

Sounds like a kickback to me or I don't understand what you mean.

Ok, found out a little more information on this. The title company charges, not the bank, the client $375 which this is the way it is shown on the HUD. Bank personnel are doing a "witness closing" and out of that $375 the title company is giving the bank $100 for the witness closing.

Also, I think we need to be showing the $100 back to the Bank on the HUD, correct? How do we do that?

If the bank is being paid for this it is a Block 1 charge on the GFE and would be a finance charge.

Thanks Randy, but how should we show on the HUD?

Line 801 - it appears to be an administration fee assessed by the bank.

I'm afraid if this is not a new fee income, I'd be looking back however long to see if I had APR, Finance Charge and zero tolerance issues.

Oh boy....thanks guys for shedding some light.

Randy, just thinking about this some more on the HUD reflection. If the HUD shows VA title charge as $375, we don't want the $100 to add to this. If we add it to line 801 it would add to the $375 and increase what the borrower pays by $100. How do we get around that?

My question is why would the title company be collecting this fee from the customer and then giving it to you if you did not request the fee for the service being provided or approve the fee in the first place.

Not Randy but don't you have other charges in 801 such as maybe your origination charge, doc prep, something? It sounds odd to only have one charge in 801.

In my shop, we have the loan fee and the in-house appraisal fee, at minimum, in 801.

Wait a minute. Why are you showing the 3rd party closing fee in 801 anyway? That should be in the 1100 section. If you are receiving a fee (of any kind) it goes in 801.

RR Joker, yes the closing fee is in the 1100 section, i.e.the total of $375. But if we add the $100 in line 801 it will add to the 375 and increase what the borrower has to pay which is not what we want.
Good question Randy.....not sure I know the answer to that. All I know is that is the way it is being done.

OK - can you tell me actually what this fee actually represents, because maybe I assumed something that is not true. What exactly do you do to earn this fee. Is this from every title company or just this one?

Okay. The $100 the bank receives for 'witness closing' should be in 801 and the remaining $275.00 should be in 1100. That's the way it appears to me to need to be disclosed properly.

To be clear, by 'witness closing' does that mean your bank (Loan Officer, maybe) actually handles the closing FOR the title company who prepared the closing? Rather than the borrower having to go to the title company, or them to your office or the borrower's home?

I asked, because if this is in Georgia, there are some real interesting lawsuits in the works regarding this practice and fee. The attorney associations are claiming it is an illegal practice of law.

RR Joker, yes that is exactly what is happening here. Our loan processor is the one who is performing the witness closing for 1 specific title company.....so makes sense that 275 in 1100 section and 100 in section 801
Randy, do you know why they are saying it is an illegal practice of law?

It is based on this. The lawsuits are actually targeted at attorneys that get paid for witness only closings without taking responsibility for the rest of the transaction. How the bank, a non-lawyer, can get a fee for this or even perform a closing is beyond me.


Advisory Opinion No. 86-5, issued by the Supreme Court on May 12, 1989, the court considered whether an attorney may delegate to a nonlawyer the "closing" of a residential real estate transaction. After noting that O.C.G.A. § 15-19-50 defines the "practice of law" to include "conveyancing", "the giving of legal advice," and "any action taken for others in any matter connected with the law," the court concluded that the "closing" of a real estate transaction constitutes the practice of law.

Ouch....I think this needs to be taken to our Attorney.....Thanks so much.

And I agree, Randy. It didn't cross my mind, but yes...Georgia and "illegal practices of law" has been a hot topic around here for a long time. Haven't heard much lately, but it's certainly not new.

We use lawyers to close transfer of title loans, however...we don't typically get involved with 'title companies'.

I've been asked if these would this just be considered "notary fees" for witness closings of which RESPA agrees the charge is in 1100 section?

shopgirl...why don't you explain the actual closing process. Who conducts the settlement on a loan that involves a transfer of title?

From what I'm told, this person has the borrower(s) sign the closing documents and explains what each of the forms is for. Nothing else.

It looks like in our State -VA, banks can act as a settlement agent and receive fees for the settlement. So, I'm leaning now that the charges do go in 1101. But I still think the $100 needs to be shown that it is coming to the Bank and not the title company.

Block 4, "Title services and lender’s title insurance." In this block, the loan originator must state the estimated total charge for third party settlement service providers for all closing services, regardless of whether the providers are selected or paid for by the borrower, seller, or loan originator.

These are not "third party" settlement services - they are paid to the bank. They go in Block 1 and not in Block 4.