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#2103894 - 10/20/16 04:19 PM Re: To Shop or Not to Shop Tracey, CRCM
Tracey, CRCM Offline
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Gorham, ME
the provider on our list services all our area.
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TRID - TILA/RESPA Integrated Disclosures Rule
#2103898 - 10/20/16 04:42 PM Re: To Shop or Not to Shop Tracey, CRCM
Truffle Royale Offline

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So if the service provider can do the work, why did you chose someone else?

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#2103919 - 10/20/16 05:19 PM Re: To Shop or Not to Shop Truffle Royale
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Seems like the regulation insinuates this, but it is not clear that is for sure. Therefore, I could still see a reviewer having an issue with it.

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#2103962 - 10/20/16 07:56 PM Re: To Shop or Not to Shop Tracey, CRCM
justsayjulie Offline
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back home again
Truffle, that's my question, too. If you have someone on your list who could complete the service, why would you NOT use that provider?
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#2103971 - 10/20/16 08:24 PM Re: To Shop or Not to Shop Tracey, CRCM
Tracey, CRCM Offline
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We use a settlement agent for to represent the bank. That is who is on our list and services our entire lending area. The other provider we would select would be for title insurance, etc. So the customer can use our agent for those items, or select their own.
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#2103975 - 10/20/16 08:33 PM Re: To Shop or Not to Shop Tracey, CRCM
rlcarey Online
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I'm really confused.

How many service providers are typically involved in one of your loans, how do you disclose the individual services, as listed on the LE on your written list, and where on the LE are they disclosed?

We continue to talk in generalities here and without all of this specific information, I think we are all making assumptions that may or may not be true. Not all loans in all States are the same.
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#2103978 - 10/20/16 08:40 PM Re: To Shop or Not to Shop Tracey, CRCM
Tracey, CRCM Offline
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We are in Maine, where the customer has the right to select an attorney of their choice to perform title work and provide title insurance. If they do not with to exercise that right, the lender selects one for them.

We have 1 service provider on our list, who acts as our settlement agent (representing the bank). These fees are disclosed in Section B on the LE. The services for the title work/insurance are in Section C as the customer can select their own.

2 providers (could be the same, could be different). If the customer does not select we will then select based on our rotating list, as we do not want 1 provider doing everything on every loan.

On the CD, we would show our settlement fee in Section B (representing the bank) and the other provider in Section C.

Does that help?
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#2103999 - 10/20/16 10:39 PM Re: To Shop or Not to Shop Tracey, CRCM
Glutes Offline
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Tracey, if the borrower does not choose when they are allowed to shop, the reg states the fee(s) for that service goes in Section B Borrower Did Not Shop on the CD with the fees that may, in aggregate, increase by no more than 10 percent.

I believe that is what you were originally wanting to know and what the auditor was telling you and you are/were disputing. My previous response provided the part of the reg that addresses this which supports the guidance the auditor was providing you. It's stated rather clearly.

It does not matter what service provider was ultimately selected, whether they were on or off the list, and what other party made the selection. What matters is that the customer did not choose. That's the trigger to place in Section B on the CD subject to the 10% aggregate limit.

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#2104016 - 10/21/16 02:34 AM Re: To Shop or Not to Shop Tracey, CRCM
Truffle Royale Offline

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Still not clear enough for me to understand, Tracey.
Do you list the same provider for Settlement service AND for title insurance?
Because I think if you're just putting that attorney down once, how is the borrower to know that they are choosing for two different services?

As for rotating providers, do they all charge the same thing? If not, then why wouldn't you rotate your service provider list to coincide with the quote on the LE? You're not really giving a good faith estimate if you know you're going to use someone else who will cost up to 10% more.

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#2104045 - 10/21/16 02:30 PM Re: To Shop or Not to Shop Tracey, CRCM
Dan Persfull Offline
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If the borrower did not choose the provider then the fee goes in Sec. B - Services Borrower Did Not Shop For.

As Randy stated we deal with too many generalities in the threads and loan processes can vary from state to state. In a nutshell the section of the Reg. that has been cited is stating if the borrower chose from the provider list or allowed the lender to choose then the borrower did not shop, therefore all related fees belong in Sec. B and is subject to the 10% tolerance regardless of the provider chosen by the lender.
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#2104091 - 10/21/16 05:07 PM Re: To Shop or Not to Shop Tracey, CRCM
Tracey, CRCM Offline
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Thanks all. I called our examiner as well, and we are all set. Its semantics at this point. It was always subject to 10%, just needs to be moved to Section B.
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#2104151 - 10/21/16 07:35 PM Re: To Shop or Not to Shop Tracey, CRCM
Glutes Offline
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One last comment regarding the questions about the Bank choosing off the list when the customer opts not to select allowing the Bank to do the choosing for them.

The Bank, just like the borrower, is under no obligation to choose the provider on the list.

While the list is provided by the Bank, it is not intended to be the Bank's preferred list of provider(s) nor it's endorsed list of provider(s). It's merely a list of at least 1 "available" provider that can be selected by the borrower to perform the service they are allowed to shop for.

The Bank gains no advantage in the good faith determination if they choose a provider off the list for whatever their reasons may be (e.g. to rotate among many local providers who are customers of the Bank while the list is a list of 1). The good faith determination is the same as if they chose from the list.

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#2104164 - 10/21/16 08:33 PM Re: To Shop or Not to Shop Tracey, CRCM
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Glutes - I am using your exact same argument in a discussion on RegList, lol. And, I don't even 100% agree with you. My take is it is not clear either way and I can see an argument for both.

[You’ve provided the commentary below for the 10% bucket: lender discloses ABC, consumer picks ABC or just does nothing, ABC is used. Result, ABC’s charges are subject to a 10% tolerance. Are we agreed so far? Per the portion you highlighted, whether the consumer picks ABC or just accepts ABC, the Bureau considers the service ‘not shopped’ because the provider appeared on the lender’s SSPL. I recall some discussion thread on this a few months back covering the risks of disclosing multiple providers and a recommendation that only one (the required minimum) be identified for each covered service. Moreover, I’m fairly certain that this was discussed in one of the webinars from CFPB over this topic-perhaps April-ish?

So, I’m guessing the 0% is what you’re questioning? I want to say that the same webinar discussed the penalties for not furnishing a valid SSPL, but I’d have to check back to make sure that was the source. This was also one of the ‘KYBO cleanup’ items from this summer’s proposal as well. While comment (e)(3)((ii)-3 (below) discusses good faith in the context of a 10% increase for SSPL-disclosed providers; it depends upon the lender satisfying the obligations of 19(e)(1)(vi)-namely the delivery of a valid SSPL. In any event, the regulations are specific that if the lender does not provide the consumer with an opportunity to shop for a service, then the fees it provides on the LE are subject to a 0% tolerance. The recent rule clarifications for (e)(3)(ii) state that increases may be permitted to charges for “[f]ees paid to an unaffiliated third party if the creditor permitted the consumer to select a settlement service provider that is not on the list provided pursuant to § 1026.19(e)(1)(vi).” In other words, the consumer must choose. The Bureau’s prior guidance seems clear that picking a provider not on the list is “shopping,” while doing nothing or even picking the provider on the list is “not shopping” because the lender ultimately picked the provider. I don’t see any way in which the lender going off the list is any different-it’s not shopped by the consumer.

So, here’s my distillation: The lender is supposed to identify at least one third-party provider for every service the consumer can shop for. It does so on the SSPL-essentially saying to the consumer “you can pick who does this service, but if you don’t; this is the company that’ll provide it.” If the lender fails to provide the SSPL at all, then they have not allowed the consumer to shop for any service. If the lender provides an SSPL that does not identify a valid provider, then again they have failed to fulfill the shop requirement; and again the default is to impose a 0% tolerance. This is the general rule of good faith under 19(e)(3)(ii). If the lender fails to qualify for one of the exceptions and increase the fees in good faith because it didn’t comply with the shopping requirement, then it cannot increase fees over what was initially disclosed.

Are you questioning whether a lender furnishing a SSPL identifying one vendor, then using a different vendor not on the SSPL is a violation of the identification requirement? I say yes. Because an increase is only allowable if “the creditor permitted the consumer to select a settlement service provider”, I would argue that such an action would not fulfill the requirements for an allowable increase for two reasons: one, the vendor chose the provider-so the service was not shopped for by the consumer. Second, the vendor selected was not on the SSPL, so it was not eligible for the 10% tolerance increase. That means it falls under the general good-faith rule that the charge can be no more than originally disclosed by the lender. In other words-0% tolerance.]
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In essence the creditor is allowing the borrower to shop. The creditor is not contracting upfront with ABC to provide a service, in which case such a provider would go in Section B on the LE and be subject to a 0% tolerance on the CD. The creditor is saying, "Hey, you can shop for this service, and, by the way, ABC is a company that could provide such services for you." You make an assumption by stating that "you can pick the provider, but if you don't then we will use ABC." The regulation and commentary just state that an available provider must be listed, it does not state anywhere that if the provider is on the SPL, then the creditor is bound to use that provider if the borrower fails to shop. You also make an assumption saying the consumer must choose, while the regulation just states the consumer must be permitted to choose. In essence, the counter argument is this -

•Did the creditor permit the borrower to shop for the settlement service provider? (Yes, there is no upfront arrangement with ABC to provide the service. Consumer may select whoever they want. Check one.)
•Did the creditor provide a written list showing a settlement service provider that was available to perform services for that region. (Yes, Check two.)

The fact that the creditor ended up selecting another provider when it came time to actually close does not necessarily override the fact that the questions above were answered in the affirmative. We both agree that if the borrower doesn't choose and the lender picks ABC, then a 10% tolerance is afforded. If the lender selects XYZ after permitting the borrower to shop but they failed to do so, why wouldn't the lender get the same 10% leeway? The lender should be even more familiar with the fees of ABC company who they listed on the SPL, but they are not held to a 0% tolerance.

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#2104278 - 10/24/16 05:47 PM Re: To Shop or Not to Shop Dan Persfull
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In our area, small rural community, the applicants usually tell us the name of the settlement agent they would like us to use. The provider list is given with the quote of the fees from the agent and is listed on the LE in Sec. C. At closing should these same fees be moved to Sec. B on the CD? The customer is telling us up front who they want to use and since there are a limited number of
closing agents in our area most if not all are on our approved list.

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#2104295 - 10/24/16 06:30 PM Re: To Shop or Not to Shop Tracey, CRCM
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ccman - Yes, if you put the same provider in Section C on the LE that is on your attached SPL, then the fee should "slide" to Section B on the CD.

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#2104311 - 10/24/16 06:46 PM Re: To Shop or Not to Shop Compliance NABW
ccman Offline
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Thanks, we'll have to make a change in the CD. Is there room in Sec. B for six additional fees? We are using five of the ten shown now?

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#2104375 - 10/24/16 09:48 PM Re: To Shop or Not to Shop Compliance NABW
Glutes Offline
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Originally Posted By Justin C.
Glutes - I am using your exact same argument in a discussion on RegList, lol. And, I don't even 100% agree with you. My take is it is not clear either way and I can see an argument for both.


Justin, what specifically do you not believe is clear?

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#2104414 - 10/25/16 12:58 PM Re: To Shop or Not to Shop Glutes
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What's not clear is how a reviewer would treat the situation, since it is not specifically mentioned in the Regulation. Common sense would dictate that the Settlement Service Provider the creditor lists on the WPL would be the same provider the creditor selects if the consumer fails to shop. If the consumer fails to shop and the creditor picks a random company that was never disclosed before, then such a scenario is not specifically dealt with in any Reg or Commentary. As the poster on the other thread said, this could be seen as "gaming" the system or "bait and switch."

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#2104553 - 10/25/16 07:41 PM Re: To Shop or Not to Shop Tracey, CRCM
Glutes Offline
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The regulation is actually very clear in what you do if a consumer fails to shop and the creditor picks a random company that was never disclosed before. It's addressed in the part of the reg that has already been cited. Did the consumer make a selection or not when they were allowed to shop? That is what the reg asks for you to evaluate. The scenario in question tells us the borrower did not make a selection, and if they did not make a selection, Section B of the CD and 10% is the reg's answer.

There is no further requirement to evaluate who chose in lieu of the borrower and if that choice was on or off the list. Focusing on who chose when the borrower does not and if that choice was on/off the list is creating unnecessary confusion and raising irrelevant questions...particularly when it's the Bank doing the choosing. It just doesn't matter with respect to where you place the fee and what tolerance threshold it's subject to. What matters is simply that the borrower was allowed to shop and they chose not to....the reg clearly tells you what to do in that case. You go with what the reg provides. No need to make it any more complicated than it already is.

While it doesn't matter if the Bank chooses and they choose off the list, doing so provides the bank no advantage in terms of tolerance consideration. The fees would be subject to the same 10% tolerance consideration as if they chose from the list. Think about this for a second. If fees for a service provider chosen on the list are allowed to increase subject to a 10% aggregate limit and fees for a service provider not on the list would be subject to the same limited increase.....what exactly is the difference? What advantage did the Bank gain by choosing off the list? How would the bank be "gaming the system" or be engaging in a "bait and switch" scheme when fees aren't allowed to increase any more than if the service provider was on the list?

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#2104573 - 10/25/16 08:41 PM Re: To Shop or Not to Shop Tracey, CRCM
John Burnett Offline
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No, the only way in which the bank profits would be (if it's smart) that it gets to work with a provider that it "plays well with." and whose work it finds acceptable. Ideally, that would apply to anyone the bank selects. In reality, it might choose badly on occasion (trying out the new kid in town, etc.)
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#2104824 - 10/26/16 08:38 PM Re: To Shop or Not to Shop Glutes
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I see it as simply overcomplicating and issue that was a non-issue in addressing this mess especially for small community base banks. It is the immense size, breath and width of TRID that is drowning our departments with overly complicated legal-eze
and simply chokes the marketplace. I am sure we will continue to "discover" other mis-conceptions in this enormous reg as it continues to grow (amendments totaling another mere 300+pgs). Really simple!

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#2104906 - 10/27/16 02:56 PM Re: To Shop or Not to Shop Tracey, CRCM
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Glutes, I have read the Reg. and commentary over and over. That is why I agree that your analysis may likely be correct. However, NOWHERE does it specifically state "The consumer fails to shop and the creditor selects a provider that is not on their WPL."

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#2104937 - 10/27/16 04:33 PM Re: To Shop or Not to Shop Tracey, CRCM
Dan Persfull Offline
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If the consumer did not shop, which means they chose a provider on the providers list or they allowed the lender to choose, then all applicable charges fall within the 10% tolerance category. I'm not sure how cited portion of the Reg. could be any clearer.

Are you saying Justin that if the borrower allows the lender to choose and the lender chooses "off list" those charges would be placed in the unlimited category? If so, then I cannot agree with that interpretation.
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#2105106 - 10/28/16 04:38 PM Re: To Shop or Not to Shop Tracey, CRCM
Glutes Offline
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I believe the concern or what has been suggested by some is that if the bank chooses in lieu of the borrower in a shoppable scenario, and the bank chooses off the list, that this somehow equates to or could be seeing as the bank did not allow the borrower to shop. So rather than the 10% or unlimited tolerance options, the fees would actually be subject to the 0% tolerance. I do not agree with this sentiment and don't believe there is any real basis for the concern about a bank choosing off the list.

I think the root cause for this concern by some is the false assumption that the list represents the bank's "endorsed" or "preferred" list which it is not intended to be... that false assumption is leading to an expectation that the Bank should be choosing from the list by default and if the Bank chooses off the list, this should be looked at suspiciously as if the bank is engaged in some nefarious activity. I think hidden within the concern about a bank choosing off the list is an unfounded belief that somehow the Bank is benefiting or gaining something of value at the expense of the borrower with an off-list choice as opposed to an on-list choice. The reality is there is no inherent benefit to the bank with an off-list choice so there really shouldn't be an immediate concern about it.

Originally Posted By Justin C.
Glutes, I have read the Reg. and commentary over and over. That is why I agree that your analysis may likely be correct. However, NOWHERE does it specifically state "The consumer fails to shop and the creditor selects a provider that is not on their WPL."


But the regulation does specifically state what you do when the consumer fails to shop. There is no uncertainty about this. I'll reiterate, focusing on any other specific details beyond the only detail that matters (the borrower opted not to choose) is creating unnecessary confusion.

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#2105118 - 10/28/16 05:30 PM Re: To Shop or Not to Shop Tracey, CRCM
Truffle Royale Offline

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For my part, this scenario is not causing confusion but rather consternation.
TRID is borrower focused in an attempt to eliminate bait and switch circumstances.
And while it is clear that there is no prohibition against the bank choosing whomever it wishes, it seems underhanded and opaque in a world that encourages aboveboard and transparent actions.
jmho fwiw

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