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#2143236 - 08/23/17 03:13 PM Shopping Vs. Shopping
Bec Offline
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Bec
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The Great White North
Doing some research and I notice that some banks do not allow the consumer to shop for some services, many banks do allow for shopping.
I understand that the upside of letting the consumer to shop is that the service will then be listed in section C which enjoys no tolerance.
We are leaning towards a no shopping mindset due to some recent discoveries of problems when we moved title services from section C to Section B and not indicating that the fee should be included in the APR. Naturally we would like to mitigate problems if we can by simplifying the process. No shopping might be the answer to that situation, however, what does that break?
I know that we would not have to provide a provider list, which is also, maybe, an upside.
Shopping Vs No Shopping
single choice


Votes accepted starting: 08/23/17 03:12 PM
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TRID - TILA/RESPA Integrated Disclosures Rule
#2143239 - 08/23/17 03:15 PM Re: Shopping Vs. Shopping Bec
Truffle Royale Offline

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Not a front line bank here. Of the banks we deal with, I'd say 75% allow shopping but the other 25% do not.

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#2143243 - 08/23/17 03:30 PM Re: Shopping Vs. Shopping Truffle Royale
Bec Offline
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Do find any drastic downside to not allowing to shop of those who do not allow it? Not sure if you can answer that, but if you have noticed anything, the information would be much appreciated smile
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#2143245 - 08/23/17 03:38 PM Re: Shopping Vs. Shopping Bec
Compliance NABW Offline
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The downside is you have to be very precise with the fees charged. If you do not allow the borrower to shop then all fees are held to a 0% tolerance standard, so you have to be SURE of each fee charged and the exact amount or you will have a lot of tolerance cures. You also have to be able to provide all the services necessary for whatever thing you are not allowing them to shop for or your chosen third-party would have to do so.

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#2143257 - 08/23/17 04:03 PM Re: Shopping Vs. Shopping Bec
MScarn6942 Offline
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Land Lacking in Lakes, IL
FWIW, I'm in IL and it's common practice for the seller (or rather their agent) to choose the title company... it's always looked upon as the borrower deferring their choice and hasn't really caused any issues. There's a thread somewhere on here about it. But I can see it causing issues if we were to not allow them to shop anymore because seller's agents would throw a fit about it. Just my $0.02.
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#2143259 - 08/23/17 04:05 PM Re: Shopping Vs. Shopping Bec
rlcarey Online
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it's common practice for the seller (or rather their agent) to choose the title company

So Section 9 of RESPA doesn't apply in IL??
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#2143267 - 08/23/17 04:25 PM Re: Shopping Vs. Shopping Bec
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It applies, obviously, but guess it is not really enforced or abided by. I have heard this as well from our LOs in Illinois.

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#2143274 - 08/23/17 04:52 PM Re: Shopping Vs. Shopping Bec
RR Joker Offline
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I think like the other referenced thread on this...the following, pasted from above...is how they 'justify' it.

it's always looked upon as the borrower deferring their choice and hasn't really caused any issues
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#2143284 - 08/23/17 05:10 PM Re: Shopping Vs. Shopping Bec
Truffle Royale Offline

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First off, the IL lenders I know are very aware of Section 9. And this is not just an IL concern. In my state, the seller must by law provide title insurance to show clear title. Normally they're going to go with the company that currently holds the insurance. In most cases, the borrower doesn't care who does the TI as long as it gets done. Getting lenders coverage from the company the seller choses will be cheaper than picking a totally different company so the borrower will normally agree to use the same one the seller is. How is that not making a choice that is valid under TRID?

Second, the fees are NOT zero tolerance just because you do not allow the borrower to shop.
Title insurance is in the 10% bucket.
Notwithstanding any valid changed circumstances to the contrary, if you don't allow the borrower to shop, you've got a 10% margin which you shouldn't need because you chose the provider so you must the cost.

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#2143285 - 08/23/17 05:14 PM Re: Shopping Vs. Shopping Bec
Truffle Royale Offline

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Bec, we haven't had any issues with banks that don't allow the borrower to shop.
On the LE, it's the same as if you have a SSPL that only shows one provider. You use their cost.

All of that said, it sounds like you've got an LOS training issue rather than a servicing provider one.
If you want to be able to hard code fees as PPFCs yes, going with no provider list is one way of doing it.
But, harsh as it sounds, this seems to be a dumbing down approach rather than a training up.

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#2143287 - 08/23/17 05:19 PM Re: Shopping Vs. Shopping Bec
RR Joker Offline
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I know in our system, it wouldn't matter which section it's in...if it was coded an APR fee, it would be that no matter where you place it.
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#2143288 - 08/23/17 05:20 PM Re: Shopping Vs. Shopping Bec
Tracey, CRCM Offline
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Gorham, ME
Our state requires borrowers to be allowed to select their own agent to perform title
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#2143294 - 08/23/17 05:40 PM Re: Shopping Vs. Shopping Bec
RR Joker Offline
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Federal level [RESPA] requires it as well...it's just that quite often, the buyer defers to the seller's choice for various reasons. Here, the buyer pays 99.99% of closing, and even still will often not care who closes the loan unless they have a friend in the business. Or so it seems.
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#2143298 - 08/23/17 05:47 PM Re: Shopping Vs. Shopping Truffle Royale
rlcarey Online
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Originally Posted By Truffle Royale
Second, the fees are NOT zero tolerance just because you do not allow the borrower to shop.
Title insurance is in the 10% bucket.


First, my Section 9 comment was only made tongue in cheek. I know very well how this works.

Second, TR - that statement is not correct. If you don't allow them to shop - it is 0% tolerance.
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#2143300 - 08/23/17 05:48 PM Re: Shopping Vs. Shopping Bec
RR Joker Offline
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Agree. It's only 10% if you allow shopping AND they pick someone on the list. Otherwise you controlled it just like an appraisal or a bank fee.
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#2143311 - 08/23/17 06:01 PM Re: Shopping Vs. Shopping Bec
Compliance NABW Offline
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That is my understanding as well, per my original post. That's what my FIS Quick Reference guide says at least smile.

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#2143312 - 08/23/17 06:02 PM Re: Shopping Vs. Shopping Bec
Truffle Royale Offline

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mea colpa. I stand corrected. Thank you Randy and Joker.

Tracey, I apologize for not including the word 'owners' in my post regarding state law.
TRID requires that the borrower select their title provider.
State law comes in to play when you're talking about owner's title.
My state is dictating that Owners title insurance is the method by which a seller must shown clear title making it a seller's cost rather than the optional owner's title insurance that is available in many other states.

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#2144034 - 08/29/17 05:11 PM Re: Shopping Vs. Shopping Bec
mdosu Offline
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Justin, how did you guys handle construction-perm consumer loans? Did you still allow shopping? There are some smaller title companies that do not have the staffing or infrastructure to close a construction loan. In my view, you can still allow them to shop, but the vast majority probably did not, mostly likely bc they couldn't find a local closing agent that can do the work.

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