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#2112399 - 12/28/16 09:34 PM Re: TRID - Service Provider List question John Burnett
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John - Agree with 1,2,4, and 5 for sure. Not quite positive about 3#. Is it supposed to override the existing guidance and examples laid out for the 10% tolerance section?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2112411 - 12/28/16 10:19 PM Re: TRID - Service Provider List question CindyMoe
John Burnett Offline
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Here's proposed comment 19(e)(1)(vi)-4:

"4. Identification of available providers. Section 1026.19(e)(1)(vi)(C) provides that the creditor must identify settlement service providers that are available to the consumer. A creditor does not comply with the identification requirement in § 1026.19(e)(1)(vi)(C) unless it provides sufficient information to allow the consumer to contact the provider, such as the name under which the provider does business and the provider's address and telephone number. Similarly, a creditor does not comply with the availability requirement in § 1026.19(e)(1)(vi)(C) if it provides a written list consisting of only settlement service providers that are no longer in business or that do not provide services where the consumer or property is located. If the charge for a particular service for which the consumer is permitted to shop is payable by the consumer, the creditor must specifically identify that service and an available provider of that service on the written list of providers unless, based on the best information reasonably available to the creditor at the time the disclosure is provided, the creditor knows that the service is provided as part of a package (or combination of settlement services) offered by a single service provider. Specific identification of each service in such a package is not required provided they all are services for which the consumer is permitted to shop."

And here is proposed comment 19(e)(3)(iii)-2:

"2. Good faith requirement for required services chosen by the consumer. If a service is required by the creditor, the creditor permits the consumer to shop for that service consistent with § 1026.19(e)(1)(vi)(A), the creditor provides the list required by § 1026.19(e)(1)(vi)(C), and the consumer chooses a service provider that is not on that list to perform that service, then the actual amounts of such fees need not be compared to the original estimates for such fees to perform the good faith analysis required by § 1026.19(e)(3)(i) or (ii). Differences between the amounts of such charges disclosed under § 1026.19(e)(1)(i) and the amounts of such charges paid by or imposed on the consumer do not constitute a lack of good faith, so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the consumer informs the creditor that the consumer will choose a settlement agent not identified by the creditor on the written list provided under § 1026.19(e)(1)(vi)(C), and the creditor subsequently discloses an unreasonably low estimated settlement agent fee, then the under-disclosure does not comply with § 1026.19(e)(3)(iii) and good faith is determined under § 1026.19(e)(3)(i). If the creditor permits the consumer to shop consistent with § 1026.19(e)(1)(vi)(A) but fails to provide the list required by § 1026.19(e)(1)(vi)(C) or the list does not comply with the requirements of § 1026.19(e)(1)(vi)(B) and (C), good faith is determined under § 1026.19(e)(3)(i) instead of § 1026.19(e)(3)(iii) regardless of the provider selected by the consumer."

But proposed comment 19(e)(3)(ii) -2 may be what you're asking about. It concerns the 10% aggregate increase group and would allow for a "surprise fee" to be included in the 10% calculation (see para. ii of the comment). Note the bolded text siting the provider list requirement, though:

"2. [i}Aggregate increase limited to ten percent.</i} Under § 1026.19(e)(3)(ii)(A), whether an individual estimated charge subject to § 1026.19(e)(3)(ii) is in good faith depends on whether the sum of all charges subject to § 1026.19(e)(3)(ii) increases by more than 10 percent, regardless of whether a particular charge increases by more than 10 percent. This is true even if an individual charge was omitted from the estimates entirely and then imposed at consummation. In all cases, however, the creditor must also comply with the requirements in § 1026.19(e)(3)(ii)(B) and (C) to satisfy the good faith standard under § 1026.19(e)(3)(ii). If the creditor permits the consumer to shop consistent with § 1026.19(e)(1)(vi)(A) but fails to provide the list required by § 1026.19(e)(1)(vi)(C) or the list does not comply with the requirements of § 1026.19(e)(1)(vi)(B) and (C), good faith is determined under § 1026.19(e)(3)(i) instead of § 1026.19(e)(3)(ii) or (iii) regardless of the provider selected by the consumer. The following examples illustrate this principle (and also assume the requirements in § 1026.19(e)(3)(ii)(B) and (C) are satisfied):

i. Assume that, in the disclosures provided under § 1026.19(e)(1)(i), the creditor includes a $300 estimated fee for a settlement agent, the settlement agent fee is included in the category of charges subject to § 1026.19(e)(3)(ii), and the sum of all charges subject to § 1026.19(e)(3)(ii) (including the settlement agent fee) equals $1,000. In this case, the creditor does not violate § 1026.19(e)(3)(ii) if the actual settlement agent fee exceeds the estimated settlement agent fee by more than 10 percent (i.e., the fee exceeds $330), provided that the sum of all such actual charges does not exceed the sum of all such estimated charges by more than 10 percent (i.e., the sum of all such charges does not exceed $1,100).

ii. Assume that, in the disclosures provided under § 1026.19(e)(1)(i), the sum of all estimated charges subject to § 1026.19(e)(3)(ii) equals $1,000. If the creditor does not include an estimated charge for a notary fee but a $10 notary fee is charged to the consumer, and the notary fee is subject to § 1026.19(e)(3)(ii), then the creditor does not violate § 1026.19(e)(1)(i) if the sum of all amounts charged to the consumer subject to § 1026.19(e)(3)(ii) does not exceed $1,100, even though an individual notary fee was not included in the estimated disclosures provided under § 1026.19(e)(1)(i).
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#2112415 - 12/28/16 10:28 PM Re: TRID - Service Provider List question CindyMoe
Mike T Offline
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I understand what is said. My next question is this. What's reflected on the providers list, re items of title charges does not sometimes match what shows up on the initial LE. That being said, suppose the fees were shopped and the borrower elected to use a different provider not on the list, thus said fees would be allocated under section C, no tolerance. Having said, what if additional title charges were added on a revised LE. Currently, depending on the bucket the fees are allocated too, I'm mainly concern with lenders title insurance and the settlement fee. If additional misc title charges appear on the revised LE, I don't consider it as a zero tolerance, instead part of the larger aggregate of title fees. Would my thought process correct in todays world but not so much in the future if the proposal goes through. I guess this would be 2 part question. I hope I didn't confuse anyone.

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#2112429 - 12/29/16 12:21 PM Re: TRID - Service Provider List question CindyMoe
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1. The list of services shown on the LE and the provider list must match.

2. If the applicant selects a provider not on your list, you put whatever fees that service provider charges in Section C of the CD and regardless of the amount of the charges or the services provided, they would be an unlimited tolerance issue.

3. If the applicant selects a provider on your list, you put whatever fees that service provider charges in Section B of the CD. Any differences in price or additional fees on listed on the LE will be subjected to the aggregate 10% tolerance now, and 0% tolerance after the proposal is finalized.

4. If your list of services shown on the LE and the provider list do not match. Then any fee not on your provider list is subject to the same tolerances.
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#2112480 - 12/29/16 04:44 PM Re: TRID - Service Provider List question John Burnett
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John - Yes, the missing notary fee example is the one I was discussing. The proposed comment seems to keep the current form when it comes to a "missing" fee.

RL - I think your #3 is also confusing to me per the missing notary fee example and the underestimated settlement agent fee. The Bureau still seems to be keeping a 10% tolerance in these situations, they are not moving to a 0% tolerance in such situations.

Or, is the argument that if you don't include the notary fee on the SPL, then the $10 notary fee is subject to a 0% tolerance? In which case, I suppose the example only applies to cases where you included the notary fee on the SPL, but did not include on the LE. I don't see how the underestimated settlement charge example (different in price) would be subject to 0%.

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#2112570 - 12/29/16 08:47 PM Re: TRID - Service Provider List question CindyMoe
MonicaMc Offline
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What if a borrower chooses the Provider on the SPL. Then a changed circumstance happens that requires a new title fee. Will that new fee need to be added to the SPL at the time the re-disclosed LE is issued (assuming it goes over the 10% tolerance)?

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#2112573 - 12/29/16 08:54 PM Re: TRID - Service Provider List question CindyMoe
John Burnett Offline
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Yes.
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#2112595 - 12/29/16 10:00 PM Re: TRID - Service Provider List question CindyMoe
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Do others routinely send out the SPL with revised LE's?

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#2112606 - 12/29/16 10:24 PM Re: TRID - Service Provider List question CindyMoe
Mike T Offline
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wonder if anyone has a thorough TRID checklist they use for audit purposes? I would definitely appreciate anyone's help.

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#2112616 - 12/29/16 10:52 PM Re: TRID - Service Provider List question CindyMoe
rlcarey Online
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Justin - only if the changed circumstance requires it by adding fees or more service providers.

Mike - try the interagency examination procedures.
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#2112623 - 12/29/16 11:26 PM Re: TRID - Service Provider List question CindyMoe
Mike T Offline
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I was hoping for a quick checklist that a lender, anyone is currently using to validate the information.

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#2112631 - 12/30/16 12:42 PM Re: TRID - Service Provider List question CindyMoe
rlcarey Online
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Quick checklist? My complete audit program based on the examination procedures encompass 64 pages for a complete review of the TRID disclosures (per loan). I suggest that you take the exam procedures and pick and choose what you think, for your organization, are the hot issues based on experience and build your own checklist. Depending on your products and services, secondary market considerations, etc. a checklist for one bank may not be the best solution for the bank next door.
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#2112645 - 12/30/16 01:54 PM Re: TRID - Service Provider List question rlcarey
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Lol. That's about what I said to my previous boss when he demanded that I create the monitoring portion of a CMS. I said, "Check out this Lexus Nexus monitoring book, it's 1,000 pages or so. We would actually need bodies to do the testing." He said, "What is all this?" --- I replied, "These are all the Regulations that apply to being a depository bank!" hahahha.

Interesting about providing the SPL again. I haven't heard of that until now.

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#2112731 - 12/30/16 06:49 PM Re: TRID - Service Provider List question CindyMoe
CSB98 Offline
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Back to the topic at the beginning of this thread regarding listing service providers that can provide the service in the area where the property is located. If we lend in State A and also State B can we list all service providers for both states on one list, or does the list need to be tailored to that specific property location?

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#2112737 - 12/30/16 07:02 PM Re: TRID - Service Provider List question CindyMoe
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The Service Provider List needs to be loan specific.

That means if, on a specific loan, the provider cannot do the service due to property location, then they do not belong on the list.

It also means that if the loan doesn't require a service (think survey) then you cannot list providers for that service on the list either.

So no, you cannot list all service providers for both states on one list.

Further, why would you be putting more than one provider for a given service on any list? Go with the one whose prices you are sure of and be done with it. The service provider list is not supposed to be a list of all providers for a given service. It's supposed to be a list of at least one provider for a service required for the loan.

Bottom line, throw out all your generalized service provider lists.

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#2112813 - 01/03/17 01:29 PM Re: TRID - Service Provider List question CindyMoe
John Burnett Offline
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This is definitely a topic on which opinions have changed since pre-TRID implementation. I recall that during the months before October 2015 there was a lot of discussion about "standardized" lists of providers (LOP). But if it hasn't been made clear since then, the Bureau is certainly proposing to make it clear in its TRID revisions proposal, there is an expectation that (1) the list of services in the LOP match the list in Section C of the loan estimate; (2) there should be at least one provider on the LOP available to perform each service listed on the LOP; (3) the LOP should not include any provider who is not available to perform the services listed; and (4) the services in both Section C of the LE and on the LOP have to be itemized, unless the lender is aware at the time of issuing the LE that a service bundle or combination of services is available.

And, of course, "available" means the provider is in the business of providing the service in the area in which the property and/or the borrower are located.
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