We are trying to determine how to create a compliant service provider list, particularly for title-related services, when making loans outside of our normal market area in Kentucky. In particular, we have TPO relationships with banks in Kentucky that are outside of our normal reach. We also have customers that regularly purchase property that is out-of-state (i.e. Florida).

We are finding it difficult to maintain multiple provider lists or constantly make changes so that there is a provider on the list where the consumer or property is located.

Is it acceptable to include a regional title company (i.e. serves all of Kentucky and Middle Tennessee) on the list to cover loans made through TPOs? Is it acceptable to include a national title company on the list to cover loans made out-of-state? We plan to continue to include the providers currently on our list for our normal market area and just add a regional and national company.

The only requirement is to provide contact information for a service provider that can provide the required service where either the consumer or property is located. The could be a contact at an individual office or where they could contact a regional or national title company who then would refer the consumer to the local office of their choice.

Just make sure that if the property is in Florida and the borrower lives in Kentucky, you mostly would have to list a company that controls a Florida title company for title insurance as your Kentucky title company most likely cannot write title insurance in Florida.

Right, you are required to list one provider. As previously stated they have to be able to actually close the loan and must be listed as they are licensed in that state. We had that issue come up with a regulator. We listed the national company name but they were registered in that state under a slightly different name. We ended up creating an SSPL for each state specific to our preferred Title company. We had them give us the contact info, license numbers, legal name and all that for each state we use them in and set up state-specific templates.

We currently are only listing "Title Services" as a suite of services/fees and are not breaking out the individual fees/services. In TRID 2.0 CFPB clarified that you must list out each fee/service which the lender REQUIRES. I take this to mean we require Title Insurance and a CPL. If title charges them a settlement fee, service charges and whatnot we are not required to list those. So we will have to update those templates to list Title insurance, CPL, maybe others.

If title charges them a settlement fee, service charges and whatnot we are not required to list those.

I am not sure I follow. If they are closing the loan for you - how is a settlement charge not a required service unless you close your own loans and closing at a title company is a borrower option? You have to duplicate the services for all fees that are listed in Section C on your provider list.

Agree with RL. I was pretty much in that "camp" from the get go, but I did think in the Finalized rule for "TRID 2.0" they ended up not going through with the proposal to be fee specific and they gave more leeway to allow an overall category on the SSPL/WPL.

I think the question isn't whether the settlement charge is a required service, but rather whether it needs to be itemized both in Section C and on the SSPL. Can you say "Title Services=$500" with 1 entry on the SSPL, or do you have to say "Title Examination= $250, Settlement Charge=$200, Service Charge=$50" with 3 entries on the SSPL.

I believe what has always been true, and the new rules make more clear, is that either way is acceptable on the LE.

"and they gave more leeway to allow an overall category on the SSPL/WPL."
" the new rules make more clear, is that either way is acceptable on the LE."

Would either of you care to point out where this leeway is located in the amendments?

Here is the amended commentary:

The settlement service providers identified on the written list required by § 1026.19(e)(1)(vi)(C) must correspond to the required settlement services for which the consumer may shop, disclosed under § 1026.37(f)(3).

Where does it say you can lump all title services together??

I'll have to do a bunch of reading that I don't feel like doing at the moment, but I believe I remember reading this in the Final Rule Section-by-Section analysis or the Summary with the proposed comments and then the finalized decision, you know, all that stuff in the 1,000 page document, lol. I'll look for it when I get some time.

I think you might be confusing what was in the proposal with what was in the final amendments.

For the reasons set forth below, the Bureau has decided not to finalize the proposed revisions to comments 19(e)(1)(vi)-2 and -4. Instead the Bureau is revising comment 19(e)(1)(vi)-2 to clarify that § 1026.19(e)(1)(vi)(B) provides that the creditor who permits a consumer to shop for settlement services must identify the settlement services required by the creditor for which the consumer is permitted to shop in the disclosures provided pursuant to § 1026.19(e)(1)(i). The Bureau is also revising comment 19(e)(1)(vi)-4 to clarify that § 1026.19(e)(1)(vi)(C) provides that the creditor must identify settlement service providers, that are available to the consumer, for the settlement services required by the creditor for which a consumer is permitted to shop. The Bureau is also revising comment 19(e)(1)(vi)-1 to conform with final comments 19(e)(3)(ii)-6 and 19(e)(3)(iii)-2.

The purpose of the proposed revisions to comments 19(e)(1)(vi)-2 and -4 was to clarify and simplify the disclosure requirements for settlement services on the Loan Estimate and written list of providers. As discussed above, commenters presented concerns about the potential complexity and uncertainty the proposed revisions might introduce. In pursuit of the original purpose to minimize confusion and compliance burden the Bureau believes it can achieve this purpose by revising comments 19(e)(1)(vi)-2 and -4 to clarify the current itemization requirements under § 1026.19(e)(1)(vi) instead of introducing a new disclosure scheme.

The Bureau understands from the comments that there may be uncertainty as to the extent a creditor must itemize settlement services on the Loan Estimate and the written list of providers. In revising comment 19(e)(1)(vi)-2, the Bureau is clarifying that the disclosure of settlement services under § 1026.19(e)(1)(vi)(B) need not include all settlement services that may be charged to the consumer, but must include at least those settlement services required by the creditor for which the consumer may shop. The Bureau is also revising comment 19(e)(1)(vi)-4 to provide that the creditor must identify settlement service providers, that are available to the consumer, for the settlement services that are required by the creditor for which a consumer is permitted to shop.

If the services are not required by the creditor, those service would be listed in Section H and not in Section C.

Further down it states:

"However, the creditor is not required by the provisions under § 1026.19(e)(1)(vi) to provide a detailed breakdown of all related fees that are not themselves required by the creditor but that may be charged to the consumer such as a notary fee, title search fee, or other ancillary and administrative services needed to perform or provide the settlement service required by the creditor. The same principle is true for the disclosure of settlement services under § 1026.37(f)(3). This is consistent with the Bureau’s concern, noted in the TILA-RESPA Final Rule, that a complete breakdown of all settlement services payable by the consumer could lead to information overload for the consumer and thereby hinder the consumer’s ability to shop."

and footnote:

"This is consistent with comment 19(e)(3)(ii)-2 which explains that § 1026.19(e)(3)(ii) provides flexibility in disclosing individual fees by focusing on aggregate amounts and illustrates this principle with an example of a Loan Estimate not including an estimated charge for a notary fee that is subject to § 1026.19(e)(3)(ii) but the notary fee is later charged to the consumer. In such example, the creditor does not violate § 1026.19(e)(3)(ii) as long as the sum of all charges subject to § 1026.19(e)(3)(ii), including the notary fee, does not exceed the 10 percent threshold."

And from the SECG:

"While the written list must correspond to the required services for which the consumer can shop as disclosed on the Loan Estimate, the creditor is not required to provide a detailed breakdown of all related fees that are not themselves required by the creditor but that may be charged to the consumer by the settlement service provider. These fees could include notary fees, title search fees, or other services the settlement service provider needs to perform the service that the creditor requires."

When a particular fee stops being "required by the creditor" and becomes a "service needed to perform or provide the settlement service required by the creditor" is pretty murky, but there seems to be a decent amount of leeway if a title search fee isn't "required."

"In TRID 2.0 CFPB clarified that you must list out each fee/service which the lender REQUIRES. I take this to mean we require Title Insurance and a CPL."

Piggybacking on Due Dili's comment above, what is everyone's take on listing each fee for services that the lender requires on the SSPL? We as a lender require a CPL, should we list the service and fee on our written list (but not fees for services required by title)?

not fees for services required by title

And what are those services? Services that must be performed in order for them to issue you a lender's policy? I am not sure what the big deal is here. You pick a service provider for your list. You ask them what fees they normally charge. You put them in Section C. If they don't pick your service provider, then who cares what fees show up. If you don't have a service provider that can give you an accurate accounting of the fees that they normally charge or when it comes to closing you find a bunch of fees that they didn't originally tell you about - then you have selected the wrong service provider.

Don't get lost in the weeds on this one - it is not rocket science.

Randy.....if those title fees vary based on a purchase or not a purchase, would you have 2 lists....one for your provider list on a purchase, and one for your provider list on a non-purchase? (Example: purchase transactions have "closing/escrow fees"....non-purchase do not.) Thanks.

Of course - you have to provide your estimated fees in good faith. If the fees for a purchase are different than a refinance, including fees that are not appropriate for that specific type of transaction is both not in good faith and puts you at a competitive disadvantage.

The services on your SPL have to correspond to those fees listed in Section C on the LE that is being delivered.

Ok...thanks.

I'm sorry, but I don't see that anything has changed with this at all.

Nope - nothing has changed. TRID 2.0 was only a clarification of what has always been the case. They just reiterated what was said in some of the webinars and put it in the commentary for clarification purposes.