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#2038472 - 09/15/15 01:58 AM Affiliate Closing Company and Shopping List
Carter'sMom Offline
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Joined: Aug 2015
Posts: 38
Think this through with me....

We have chosen to limit the closing companies that we work with (for closing services only). The borrower will still be able to shop for other title services such as lender's and owner's title policies. We have seven companies in one region that have signed our service level agreement. Of those seven, one closing company is an affiliate.

* So as far as the actual closing company - per the regulation, we are not allowing the borrower to shop. However, we are alllowing them to choose from the 7 approved companies in the region. I know that some title companies will be included on our list of services the borrower is allowed to shop for - owner's and lender's title opinion. However, i feel like we need to communicate this list of the 7 allowed in the region for closing services even though we are not technically allowing them to shop. I need to be able to document that we are not "requiring" the use of the affilate and it was actually a choice. I don't love the form H-27C that includes the services the borrower is NOT allowed to shop for but i am thinking this is what we need to use? Thoughts? Also to complicate things, our LOS is not currently offering the H-27C and is not sure when they will offer.

If we tell a borrower that they have to use one of our approved service providers, they will ask for a list. If we provide a list, it must be on an approved form. Am i thinking about this accurately? We seem to have circled around this tree a few times :-)

Thanks!

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TRID - TILA/RESPA Integrated Disclosures Rule
#2038478 - 09/15/15 12:31 PM Re: Affiliate Closing Company and Shopping List Carter'sMom
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,294
Galveston, TX
If they choose your affiliate it will be zero tolerance. If they choose another provider, it will be 10%. Either way, you are correct, they are not shopping.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2038483 - 09/15/15 12:50 PM Re: Affiliate Closing Company and Shopping List Carter'sMom
Carter'sMom Offline
Junior Member
Joined: Aug 2015
Posts: 38
Thanks Randy. Our affiliate title company only owns 1%. So I was thinking that the affiliate would not be an affiliate for tolerance purposes - only for affiliated business arrangement purposes? Maybe I am off in my thinking...

I think the tolerance issue will rely on the Bank Holding Act definition of affiliate (which should exclude the Title Company/Board Member). I think the affiliated business arrangement disclosure relies on the RESPA definition (i.e. 1%, etc.).



CFPB analysis of new TRID rule: (See footnote 195) http://www.consumerfinance.gov/eregulati...otnote-jump-195

Affiliated Business Arrangement Definition (RESPA) https://www.bankersonline.com/regulations/12-1024-014

RESPA Exam procedures clarifying that the Affiliated Business Arrangement requirements (page 54/82): http://files.consumerfinance.gov/f/201308_cfpb_respa_narrative-exam-procedures.pdf


Also, do you think it is necessary to provide the list of allowed closing companies to the borrower to document we are not "requiring" the use of the affiliate?
Last edited by John Burnett; 09/15/15 01:13 PM. Reason: updated link to reg X
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#2038506 - 09/15/15 01:53 PM Re: Affiliate Closing Company and Shopping List Carter'sMom
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,294
Galveston, TX
You are the one that used the term "affiliate" in the sense of TRID disclosure, so I assumed that you meant "affiliate" as defined by TRID.

IMHO - I would leave them off the list and just not deal with it all, including all the scrutiny this will generate by the regulators for a 1% ownership. Of what real value does it have to include them on your internal provider list? It just muddies the water tremendously.

Your approach to this is pretty unique as I am not aware of another bank that is going this rout with closing agents.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2038511 - 09/15/15 02:24 PM Re: Affiliate Closing Company and Shopping List Carter'sMom
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,765
Bloomington, IN
Your approach to this is pretty unique as I am not aware of another bank that is going this rout with closing agents.

I agree and if you are limiting your borrowers to the 7 closing (settlement) agents I would even opine you are not allowing them to shop since they must choose one of those 7 therefore the fees are going to be subject to 0% tolerance.
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The opinions expressed are mine and they are not to be taken as legal advice.

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