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#2143236 - 08/23/17 03:13 PM
Shopping Vs. Shopping
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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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.
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#2143245 - 08/23/17 03:38 PM
Re: Shopping Vs. Shopping
Bec
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Diamond Poster
Joined: Oct 2015
Posts: 1,671
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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
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Platinum Poster
Joined: Aug 2015
Posts: 756
Land Lacking in Lakes, IL
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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
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10K Club
Joined: Jul 2001
Posts: 84,359
Galveston, TX
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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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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2143267 - 08/23/17 04:25 PM
Re: Shopping Vs. Shopping
Bec
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Diamond Poster
Joined: Oct 2015
Posts: 1,671
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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
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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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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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2143287 - 08/23/17 05:19 PM
Re: Shopping Vs. Shopping
Bec
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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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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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2143288 - 08/23/17 05:20 PM
Re: Shopping Vs. Shopping
Bec
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Platinum Poster
Joined: Jul 2015
Posts: 542
Gorham, ME
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Our state requires borrowers to be allowed to select their own agent to perform title
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Tracey
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#2143294 - 08/23/17 05:40 PM
Re: Shopping Vs. Shopping
Bec
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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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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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2143298 - 08/23/17 05:47 PM
Re: Shopping Vs. Shopping
Truffle Royale
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10K Club
Joined: Jul 2001
Posts: 84,359
Galveston, TX
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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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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2143300 - 08/23/17 05:48 PM
Re: Shopping Vs. Shopping
Bec
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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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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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2143311 - 08/23/17 06:01 PM
Re: Shopping Vs. Shopping
Bec
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Diamond Poster
Joined: Oct 2015
Posts: 1,671
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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 .
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#2144034 - 08/29/17 05:11 PM
Re: Shopping Vs. Shopping
Bec
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Junior Member
Joined: Dec 2016
Posts: 33
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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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