We have an investor requiring a tolerance cure that doesn't appear to be accurate to me and I am hoping for some guidance to support my belief.

Our customer used two different title agencies, one for settlement and one for other title services. Our Shoppable Provider List included one of the title agencies used; however the title company that provided settlement was not listed on the SPL and was disclosed on page 1 of the CloD as the settlement agent.

The investor is claiming that since that settlement agent (used on page 1) was not on the SPL, we can not include any of the services provided by the disclosed settlement agent (listed on the SPL) within our 10% tolerance bucket, even though they performed services which were separately listed on the SPL.

In the investor's file review, they claim we owe the consumer a cure. They believe we should not have included the services provided by the disclosed service agent in the tolerance bucket resulting in a small cure to the borrower. We have tried to dispute this opinion based on the CloD listing for section B and C with no success. I don't read anything in section 1026.19(e)(3) that aligns with the investors reasoning on this point. Any additional help for a rebuttal is appreciated.

From my understanding of the question, you should have the fees from the settlement agent not listed on the SPL in your unlimited tolerance bucket as they were shopped for. The fees from the settlement agent on the SPL should be in the 10% category.

This could cause a tolerance cure depending on what other fees were charged and how they were disclosed because you're taking a "cushion" out, if that makes sense.

For example: if your disclosures say $1000 in fees are in the 10% bucket, removing $400 from the non-SPL agent makes your 10% bucket only $600. Now a $70 increase causes a tolerance cure where before it wouldn't have.

You are on the right track. I'll try to explain in more detail.

We listed Settlement Agent A on the SPL for all title services.

Our borrower used Settlement Agent A for title insurance and title search and selected Settlement Agent B to be the closing agent.

The Closing Disclosure listed the title insurance and title search fees in Closing Costs Section B and the settlement agent fee in Closing Costs Section C.

Our investor claims the fees performed by Settlement Agent A on the SPL are not allowed in the 10% bucket because all title fees fall under the unlimited category based on the settlement agent listed on page 1 of the CloD.

We only included the two settlement fees performed by the SPL agent in our calculation along with two other fees performed by providers on the SPL and no cure was required. The investor is removing the two fees provided by the agent on the SPL and in my opinion creating a cure that is not required by regulation.

Fees from the service provider on your list goes in the 10% bucket along with filing fees.

Fees from the service provider not on your list - tolerance is unlimited.

Whatever fees you disclosed for the individual services on the LE that were actually performed by someone on your list plus the filing fees are compared in aggregate to determine your 10% tolerance.

The settlement agent fees on the LE or CD do not come into the equation, as they are not on your provider list.

If you need a third opinion I agree with MScam1642 and Randy (and the investor). You can't use a fee that does not belong in the applicable tolerance bucket to compare to the ones that do.

So the investor is claiming that the services provided by the company on your SPL should be included in unlimited tolerance just because the "identified settlement agent" on page 1 who did the closing is not on the SPL? That does not make sense to me. I would ask them for a citation to support that. The customer didn't shop for those particular services; they selected someone off your list. It appears to me you did your calculations correctly.

Jen the original post states the borrower chose 2 title service providers. One not on the list and one on the list. Therefore the one not on the list is an unlimited tolerance and the one on the list is a 10% tolerance.

The investor is saying the charges for the unlimited tolerance (the provider not on the list) cannot be used for the 10% tolerance (the provider on the list) calculation. That is a an accurate statement by the investor.

IOWs I can't pull charges from Section C to offset my tolerance violations in Section B.

I don't think that is what he is saying Dan. Read the post where he breaks it down into Settlement Company A and Settlement Company B.

Each 0% tolerance service stands on its own. You cannot use a reduction in one 0% tolerance cost to offset an increase in another 0% tolerance cost.

Only the bundle of 10% tolerance services allows that sort of "netting" of increases and decreases, because you compare the total final cost for the 10% group with the total of the estimated costs for the services in that group.

I'm with Jen J.
The fact that a title company did the closing doesn't affect where the fees go.
Ask the investor where the fees would go if the closing agent was an attorney of the borrower's choosing.
The attorney would show on p1 and the fees would go in C.

Are you saving that Agent A did both title and settlement work for you? This may be what is confusing the investor too.

The borrower chose Provider A and the borrower chose Provider B. So there are 2 service providers to be disclosed on the CD.

Provider A is on the SPL therefore those charges fall within the 10% category. Sec. B.

Provider B is not on the SPL therefore those charges fall within the unlimited category. Sec. C.

You can't mix and match the charges in Sec. B & C to calculate and offset a tolerance violation.

What am I missing?

Apparently Agent A not only did Sec B title work but did "...two settlement fees" which the OP included in Sec B.
The fact that both Agent A and Agent B did settlement/closing work is what's causing the confusion.

He seems to be saying that the investor is not including the Settlement Company A fees in the 10% tolerance calculation. Settlement Company A fees do come from the Company that was listed on the SSPL. Settlement Company A (listed on the SSPL) performed the Title - Insurance and Title - Search. Settlement Company A fees should be available for inclusion in the 10% tolerance analysis, but it sounds like the investor is saying that he can't do so.

dwedding - we need you back to clarify, lol.

Sorry I was MIA.

Jen J is understanding my question accurately:
So the investor is claiming that the services provided by the company on your SPL should be included in unlimited tolerance just because the "identified settlement agent" on page 1 who did the closing is not on the SPL? YES!! That does not make sense to me. I would ask them for a citation to support that. I DID!! The customer didn't shop for those particular services; they selected someone off your list. It appears to me you did your calculations correctly. I BELIEVE WE DID TOO!!

The investor is disputing the two title service fees completed by Agent A (on the list) within the 10% tolerance bucket because the investor claims title services are unlimited based on the settlement agent listed on page 1 of the CloD and not on who provided the service. IMO, our file tolerance was calculated accurately placing only those services that were not shopped for (services completed by a provider from the list) in the 10% bucket.

I sent my third rebuttal on the finding yesterday morning. I haven't heard back yet, but will keep you posted on the results. Ugh!!

The investor is disputing the two title service fees completed by Agent A (on the list) within the 10% tolerance bucket because the investor claims title services are unlimited based on the settlement agent listed on page 1 of the CloD and not on who provided the service.

OK, I think I got it. If that's the case then I would agree. The provider conducting the settlement is to be listed on page 1 and then on page 2 you identify each title service provider used for those services. Agent A's (on the list) fees would be identified in Sec. B and Agent B's (not on the list) fees would be identified in Sec. C.

As long as the appropriate fees disclosed on the LE for each service is compared to the service actually performed and disclosed on the CD then you should be OK.

Ok. I wasn't getting the Page 1 of the CD reference, though I understood your question correctly. Sounds kind of stupid to me. Tolerance analysis is based on individual line items and depends on who performs each particular settlement service. Just because the Settlement Agent listed on Page 1 is Settlement Company B, that doesn't mean they performed the services that Company A performed.

The investor has finally agreed with the third rebuttal correspondence too, no cure is necessary!!

Thank you for all the support received to this post.

Yeah! They finally saw the light