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#2208192 - 03/08/19 12:07 AM Initial LE with Borrower-Chosen Title Company
Vive Accommodare Offline
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Vive Accommodare
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Would the title fees that we allow the borrower to shop for be an automatic zero tolerance if we were to disclose on the early disclosures the title company listed on the borrower's purchase contract? We traditionally disclose a local company and use an online-quote to disclose the title fees we allow the borrower to shop for. However, we're receiving push back from the Sales staff because they want to use a quote from the Title company listed on their purchase contracts. My fear is this could be misconstrued as us not giving the borrower the opportunity to shop for those services and immediately lumps them into the can't shop/didn't shop buckets. Am I overthinking this?
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TRID - TILA/RESPA Integrated Disclosures Rule
#2208194 - 03/08/19 04:49 AM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
Inspector Offline
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An important question to consider is why do the sales staff want it that way?

Beyond that, I have seen that method used before. It does present some potential concerns though as you are increasing the likelihood of the fees being 10% limited. Not to say that using a single, local company is designed to avoid the 10% but if its a company that you work with regularly and trust their fee quotes then you aren't setting yourself up for the risk associated with working with a multitude of companies that might create mistakes that you will be on the hook for.
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#2208200 - 03/08/19 01:30 PM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
Adam Witmer Offline
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Inspector: I have seen lenders want to due this for customer services and I get it. As a consumer, if I tell you I am going to use a specific title company, but then my LE shows a different title company than what I am going to use, I am going to be confused as to why the company I told my lender I was using wasn't on the LE - if I even notice it because, if I don't notice it, I am going to be confused/upset that the actual fees on the CD were more than what was quoted on the LE when we always knew which title company we were using. So, I get the argument though I'm not a fan of doing it that way.

Vive Accommodare: Inspector is correct that there are tolerance concerns when doing this. Keep in mind that whatever third party title company you list on your early disclosures (service provider list & LE) becomes your preferred provider, subject to the 10% threshold. Therefore, if you haven't worked with this provider before, you are gambling that they aren't low-balling the numbers. In other words, when you a company on the service provider list/LE, you are guaranteeing that the fees won't increase more than 10%. If your management is comfortable offering this guarantee for providers you have never worked with before (maybe as a customer service for your borrowers), then go for it. If management is uptight about reimbursements, however, then you would probably be better off listing a provider you are comfortable with and have your lenders explain that this is the only title company we "guarantee" the fees won't increase more than 10% of what we quoted.

To answer your specific questions:
Originally Posted By Vive Accommodare
Would the title fees that we allow the borrower to shop for be an automatic zero tolerance if we were to disclose on the early disclosures the title company listed on the borrower's purchase contract?

It is 10%, not zero.

Originally Posted By Vive Accommodare
My fear is this could be misconstrued as us not giving the borrower the opportunity to shop for those services and immediately lumps them into the can't shop/didn't shop buckets. Am I overthinking this?

If you disclose it properly, you are technically giving them the opportunity to shop - its just that they chose NOT to shop because they picked the provider on your list (which was actually the provider they picked all along). As I explained before, this puts them in the 10% bucket since they chose the provider on your list.
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#2208219 - 03/08/19 03:17 PM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
Truffle Royale Offline

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The borrower cannot shop before they have been given the documentation allowing them to shop, i.e. the Service Provider List.
The Loan Estimate gives the borrower a list of costs associated with their loan based on service providers the BANK normally uses.
The SPL tells them the companies you used to get the quotes from.
Even if the purchase contract names a different provider, until the service is actually ordered, it could change.
As Adam said, if you put the title company named on the offer on your LE, you are in fact making them your preferred provider and they go into 10% tolerance. If you've never worked with that company, you have no idea if their quote is accurate or if they're the kind of company that comes up with wire fees and assessment search fees, etc. that you could be left having to cure.
I'd be telling my sales staff that no, we're not going down that road.

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#2208257 - 03/08/19 05:14 PM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
Vive Accommodare Offline
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Sorry about that, I knew it was the 10% bucket and put zero. My brain is fried from sales staff complaints! We have let them know we're bound to the 10% bucket if we do use the title company on the borrower's purchase contract for early disclosures. We've reiterated the borrower does not have to use or recommended provider and this is giving them the option to shop. Thank you all for your input. It makes me feel like I'm understanding the regulation better than what I thought.
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#2208545 - 03/12/19 07:54 PM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
John Burnett Offline
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And just to be snippy, I'll point out that you don't name providers on the LE. They are named on the service provider list. I get it, the two are joined at the hip, so the names are provided WITH the LE, even if not ON it.
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#2213362 - 05/10/19 06:53 PM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
mac444 Offline
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I have a follow-up question to this. So if we contact the title company listed on the purchase contract and disclose their fees on the initial LE in section C but on the SPL we disclose our title provider (not the same company), would the fees fall in the 10% or unlimited tolerance?

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#2213363 - 05/10/19 07:08 PM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
rlcarey Offline
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#2213392 - 05/11/19 12:58 AM Re: Initial LE with Borrower-Chosen Title Company Vive Accommodare
Truffle Royale Offline

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Why would you bother to contact the provider on the purchase contract? That's not the intent of the Reg. You list the costs for the provider you show on the SSPL. not show one provider and list costs from another. From a Wolters Kluwer publication (4/11/19)explaining the correlation: The providers disclosed on the written list must correspond to those services disclosed on page two of the loan estimate, in section C.

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