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#1886938 - 01/15/14 04:45 PM Settlement Or Closing Fee
MB-Steve Offline
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We are not affiliated with any Title Company.
Is the settlement or closing fee charged by the title company part of the QM / Points and Fees Test? Or should it be excluded?

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Ability to Repay/Qualified Mortgage Rule
#1886964 - 01/15/14 05:13 PM Re: Settlement Or Closing Fee MB-Steve
dblack Offline
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Paragraph 32(b)(1)(i)(D).

1. Charges not retained by the creditor, loan originator, or an affiliate of either.
In general, a creditor is not required to count in points and fees any bona fide third-party charge not retained by the creditor, loan originator, or an affiliate of either. For example, if bona fide charges are imposed by a third-party settlement agent and are not retained by the creditor, loan originator, or an affiliate of either, those charges are not included in points and fees, even if those charges are included in the finance charge under 1026.4(a)(2). The term loan originator has the same meaning as in 1026.36(a)(1).
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#1886967 - 01/15/14 05:21 PM Re: Settlement Or Closing Fee dblack
MB-Steve Offline
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Thank You. This is a mess. I have secondary investors saying it needs to be included and I was under the impression from what you had posted above that that charge would not be included.

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#1886975 - 01/15/14 05:30 PM Re: Settlement Or Closing Fee MB-Steve
dblack Offline
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Send that section to them and ask them to explain their stance on it.
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#1887007 - 01/15/14 06:10 PM Re: Settlement Or Closing Fee MB-Steve
RR Joker Offline
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It's probably tripping them up because it is an APR fee. wink
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#1887221 - 01/15/14 09:26 PM Re: Settlement Or Closing Fee RR Joker
MB-Steve Offline
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They are sticking to it... for now...

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#1887857 - 01/17/14 12:07 PM Re: Settlement Or Closing Fee MB-Steve
OldSchoolBanker Offline
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FL
We utlized a national legal firm, to review our 3% P&F test. They responded similar to dblack. As long as it it a full pass through to the 3rd party, not marked up, not retained by lender and not an affiliate, it is NOT in the fees test. Yes, it is APR, however it is not in the test for P&F.

If you need a legal referral, send me a PM.
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#1900464 - 02/27/14 12:12 AM Re: Settlement Or Closing Fee OldSchoolBanker
river girl Offline
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Do we use the same decision for the HOEPA points & fees test?
Exclude any fees passed completely thru to third party?

I am mainly asking on Tax Service and Flood. We do not retain any of the fee collected on these 2 services but I have a chart from our vendor that says we include these 2 fees in the HOEPA points and fees test.

When I read 1026.32(b)I am reading we EXCLUDE any 3rd party charge not retained by the creditor.

Signed, Confused smile
Last edited by river girl; 02/27/14 12:41 AM.
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#1901039 - 02/28/14 02:33 PM Re: Settlement Or Closing Fee MB-Steve
dblack Offline
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The QM P&F test is the same as the HOEPA P&F test, just different % caps.

Is that chart from the HOEPA rules prior to the update 1/10/14?

Previously those fees were included because there was a section saying to count fees that you charge for at closing but the actual event happens after closing. That section was removed in the update.
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#1902240 - 03/04/14 11:29 PM Re: Settlement Or Closing Fee MB-Steve
Wyogirl Offline
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Laramie, WY. USA
The bank does not require the use of a title company to close it's RE purchase loans. The seller usually makes that choice and we follow along. We completely pass through closing and settlement fees. We do not count title closing or settlement fees in the APR.

We also do not count these third party fees in the P&F calc. (No affiliation with any title company).

I still use that old Reg Z chart from back in the day. Everything is a FC unless you can exclude it. We exclude these fees because we do not require the use of a title company. Do you think we tread on thin ice? smile

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#1902295 - 03/05/14 02:07 PM Re: Settlement Or Closing Fee MB-Steve
RR Joker Offline
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How can you not be requiring the use of a title company or attorney to close a purchase transaction. To do differently would be acting in the capacity of a lawyer and that's not legal.

I think you tread on very thin ice.
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#1902410 - 03/05/14 04:25 PM Re: Settlement Or Closing Fee MB-Steve
hgliii Offline
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Joker, I hope that what Wyogirl is saying that they do not choose a title company or attorney to close their loans. They do not approve their closing agents, which is treading on thin ice, as they do not get an insured closing letter.
Wyogirl, I would look at RESPA which also establishes that only the borrower may choose the title company, since you do not have approved title companies.
Last edited by hgliii; 03/05/14 04:26 PM.
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#1902429 - 03/05/14 04:42 PM Re: Settlement Or Closing Fee hgliii
RR Joker Offline
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Quote:
The bank does not require the use of a title company to close it's RE purchase loans.

I don't read it that way hgliii, but only Wyo knows for sure.

To take it further, it's very common to not require a specific closer. If the borrower chooses their own, I would hope the bank might require a copy of their E&O, or if they otherwise knew that the closer didn't know their way out of a wet paper bag, that they wouldn't allow them to close a loan for them. wink
Last edited by RR Joker; 03/05/14 04:42 PM.
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#1902449 - 03/05/14 05:15 PM Re: Settlement Or Closing Fee MB-Steve
hgliii Offline
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^^^^ I agree. I believe they are on very thin ice.

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#1902461 - 03/05/14 05:45 PM Re: Settlement Or Closing Fee MB-Steve
rlcarey Offline
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Galveston, TX
How can you not be requiring the use of a title company or attorney to close a purchase transaction. To do differently would be acting in the capacity of a lawyer and that's not legal.

This is totally a State law issue, so I would not make such a statement unless familiar with the laws of the State in which the question originated. I have worked in States that allowed a bank to close such a loan in-house if they so chose to do so.

The question is, does the bank close their own loans in this case or is the bank requiring that the loan be closed through a title company or attorney (regardless of who picks the closer). If the bank requires such, then the closing/settlement fee would be a finance charge if separately disclosed and itemized, which would only be required in certain States.
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#1902474 - 03/05/14 06:07 PM Re: Settlement Or Closing Fee MB-Steve
RR Joker Offline
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Okay, my bad. Didn't realize that was limited to State discretion.
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#1902480 - 03/05/14 06:15 PM Re: Settlement Or Closing Fee MB-Steve
rlcarey Offline
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Galveston, TX
The unauthorized practice of law when it comes to mortgage lending is really all over the board. If interested, here is a document that tries to break it all down:

See link a couple of replies below
Last edited by rlcarey; 03/05/14 06:25 PM. Reason: link did not work
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#1902482 - 03/05/14 06:18 PM Re: Settlement Or Closing Fee MB-Steve
RR Joker Offline
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The Swamp
Thanks, I will. It [mostly] makes sense when I stop and think about it...but the idea of not having a RE attorney or a title company involved is a little scary to me! wink
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#1902486 - 03/05/14 06:20 PM Re: Settlement Or Closing Fee MB-Steve
RR Joker Offline
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The Swamp
Randy, that link goes to an odd looking general index...can you point me to where in the index this might be found?
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#1902491 - 03/05/14 06:25 PM Re: Settlement Or Closing Fee MB-Steve
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
Sorry - give this one a try


Document
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#1902497 - 03/05/14 06:33 PM Re: Settlement Or Closing Fee MB-Steve
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
This is awesome! Thanks very much. :-)
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