Does each title fee need to be individually listed on the Written List of Service Providers? For example; If we have the following fees listed on our Loan Estimate; Title-Insurance Binder fee; Title-Lenders Title Policy; Title-Settlement/Closing Fee and Title-Wire Fee

Is it acceptable to list only one line on the Provider list for all those fees;
Example-

Title Insurance and/or Abstract Services-Stewart Title

Each service for which the consumer can shop must be listed. The fee column on the written list is optional.

There must be a 1 for 1 match to all services listed as shoppable in section C.

Can either of you provide a citation from the rule or a helpful response/document from the CFPB on this? Our management has decided to take the risk (see their response below). I am struggling to find a concrete argument to persuade them the other way. . .

We discussed and as a management group have decided based on the information found in the CFPB “TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure forms” in the excerpt under Services You Can Shop For Table of the Loan Estimate figure 11 on page 40, we will list the Title Company Settlement/Closing costs and any related ancillary and administrative services as one line item and total on the Loan Estimate. Management feels this will be more efficient and lessen the risk for clerical errors that can occur with listing each item separately.

Official Interpretation

19(e)(1)(vi) Shopping for settlement service providers.

3. Written list of providers. If the creditor permits the consumer to shop for a settlement service it requires, § 1026.19(e)(1)(vi)(C) requires the creditor to provide the consumer with a written list identifying at least one available provider of that service and stating that the consumer may choose a different provider for that service. 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). See form H-27 in appendix H to this part for a model list. Creditors using form H-27 in appendix H properly are deemed to be in compliance with § 1026.19(e)(1)(vi)(C). Creditors may make changes in the format or content of form H-27 in appendix H and be deemed to be in compliance with § 1026.19(e)(1)(vi)(C), so long as the changes do not affect the substance, clarity, or meaningful sequence of the form. An acceptable change to form H-27 in appendix H includes, for example, deleting the column for estimated fee amounts.

If that does not work - show them Model H-27(B):

https://www.ecfr.gov/graphics/pdfs/er31de13.086.pdf

Thank you very much for your help!

One of the services listed in Model H-27(B) is "Title - Other Title Services." Does that just cover ancillary activities charged by the title company i.e. notary fee, electronic filing, etc.?

Realize that you are dealing with the CFPB and these are just examples - and not always good ones. There are plenty of errors on the Model forms, but the regulation prevails. Grouping fees together are not allowed on the LE - so it would not be allowed in the written provider list.

I don't see that this is a problem but maybe I'm missing something.
If you're listing Title - Title Insurance and Title - Settlement/Closing costs as seperate shoppable items then it follows the Guide.
How do you know is a title company not on your list will charge just a flat closing fee or break out line items? Show the charges as the title company you're putting on your SSPL would show them and you're fine.

I agree with what TR stated above. Our providers in our area typically have 3 primary separate charges, not including any required title insurance, if any [rare for us]. Are there several 'services' included in some of their charges? Absolutely...there isn't enough room on a page for how an attorney allocates time

I agree. Here's an excerpt from page 7 of the CFPB's "2017 TILA-REPSA Rule: Detailed Summary of Changes and Clarifications"

I think that this conversation kind relates to a new issue my home mortgage team brought me.

In an audit, it seems that there was a finding noted in which the fees payable at closing were broken down to who provided the services for the title company. Those services were never added individually to our settlement service provider list. For example, we disclosed all the fees to 123 Title. The CD shows title fee to 123 Title, doc prep to So and So LLC and Title exam fee to ABC agency.

We permit the applicant to shop for title services as a whole. We get our quotes from one title company and list that company on the service provider list. It is my argument that the final CD should have the fees payable to the title company that was selected and all the fees should be listed as Able to Shop. Who they pay is on them and not us. However when the CDs have been sent they have been breaking down the fees to who the title company listed on the invoice. The wire though gets sent directly to the title company.

I really hope this makes sense. Please advise.

There have been previous discussions on this issue without any consensus as far as CFPB guidance . The question is where do you stop when you're paying one third party. Do you stop at that third party or do you continue down the rabbit hole. If the title company charges a courier fee, is that payable to the title company or do you show it as a payment to the Joe Blow Courier LLC? Is a separate postage charge payable to USPS? And on and on.

I don't think that there are two many in the industry, if they are cutting one check to the title company that will break this down much further than to the title company itself.

May I piggy-back off this thread?

At what point should a FI add another Settlement Service Provider to a list? My FI hired a LO, and they used another title company (not on our SSP List most often). I know that the LO cannot pick the title company, but in reality, the Borrowers don't have a clue and just leave it in the hands of the Lender. So, with me identifying this in Compliance, would it be appropriate to advise MGMT it would be good to add this frequently used title company to my FI's SSP List?

Thank you.

EDIT: to clarify- The newer LO uses said title company very often...and it's not on my FI's SSP List.

I would never have more than one provider for a service on my SSP list

If the borrowers are not choosing the provider then I believe the providers fees fall into the 10% tolerance category even though they are not on your list.

and just leave it in the hands of the Lender

The newer LO uses said title company very often...and it's not on my FI's SSP List.


If you have not been abiding by the tolerance limitations you most likely have some cures to take care of since the LO has been allowed to choose the service provider.

3. Services for which the consumer may, but does not, select a settlement service provider. Good faith is determined pursuant to § 1026.19(e)(3)(ii), instead of § 1026.19(e)(3)(i), if the creditor permits the consumer to shop for a settlement service provider, consistent with § 1026.19(e)(1)(vi)(A). Section 1026.19(e)(3)(ii) provides that if the creditor requires a service in connection with the mortgage loan transaction, and permits the consumer to shop for that service consistent with § 1026.19(e)(1)(vi), but the consumer either does not select a settlement service provider or chooses a settlement service provider identified by the creditor on the list, then good faith is determined pursuant to § 1026.19(e)(3)(ii), instead of § 1026.19(e)(3)(i). For example, if, in the disclosures provided pursuant to §§ 1026.19(e)(1)(i) and 1026.37(f)(3), a creditor discloses an estimated fee for an unaffiliated settlement agent and permits the consumer to shop for that service, but the consumer either does not choose a provider, or chooses a provider identified by the creditor on the written list provided pursuant to § 1026.19(e)(1)(vi)(C), then the estimated settlement agent fee is included with the fees that may, in aggregate, increase by no more than 10 percent for the purposes of § 1026.19(e)(3)(ii). If, however, the consumer chooses a provider that is not on the written list, then good faith is determined according to § 1026.19(e)(3)(iii).

Unless this new LO is located in a different market than the service provider on your SPL then they should not be allowed to deviate from the provider on your list. If they are in a different market then they should be using a SPL specific to that market.


_________________________

You only need to list one for each service listed in Section C, but it ought to be a provider whose costs are consistent with those used on the loan estimate. I usually hear about geographic differences in the SSPL when one provider doesn't service the full footprint of the creditor's service area, and not as often about differences based on individual lender preferences. Some banks don't give their lenders such leeway (other than geographic coverage differences). I don't recommend it. But if your bank does allow it, the SSPL that lender gives out should agree with the provider he will choose if the borrower doesn't shop.

I'd also make sure that the cost estimates in section C of the loan estimates for loans handled by this LO are in agreement with the costs imposed by his/her favorite title company. That will prevent your being hit with substantial tolerance violations.

One other thing -- Other than being comfortable with "his/her" title company's work, is there any other possible reason for this lender's use of the other company? Is there a friend or family member working there? Is there any financial incentive for that lender to use that company (which would make for a bigger problem than you've considered)?

The bank should be setting the list of companies it will work with (if more than one). Not its individual loan officers.

This is a key question. I just happened to once overhear a lender say "all of my loans go to XYZ title instead of ABC (which was on the SPL and the one every other LO used) because my wife is the manager at XYZ title." As John said, this turns into a much bigger problem than tolerance cures...

Thank you everyone. Sorry it took a few days to get back. There is so much more I need to look into with the info everyone has provided. THANK YOU for the understanding and help. I may be back with more questions as I work this.

Sorry back on this again. I have no idea why I am second guessing myself so much here. It seems my home mortgage team has been adding every fee that is located on the invoice provided by our selected or preferred title company to the Settlement Service Provider list, not just our required services, so something like Randy mentioned, courier was disclosed, as well as Title insurance binder, title searches etc.

The reason we received a finding from external QC was that the fees for those items were disclosed on the list and payable to the title company. On the CD, we disclosed the fees payable to other parties but listed under did not shop. For example- Provider list says- Title- Insurance Binder. Title-Company Name. The CD says Insurance Binder - Atty Name. The issue is "the service provider list found in the file did not identify any of these companies as known providers"

1026.38(f)(2) says "the name of the person ultimately receiving the payment for such amount". As the title bill came that way that is how it was disclosed.

Is this an actual finding? The service was disclosed. The title company selected this attorney so the customer did not shop. Should the CD list the title company name or "the person ultimately receiving"? (wire went to title company only) Should this even be listed as a finding. Can I get your thoughts, again, please? Thanks in advance,

You tell them they can shop for services. You list the estimated charges and the contact information for your Title Company - call it XYZ.

They contact XYZ Title Company and make arrangements to use their services. So - you list a Attorney Fee in Section C and you list the XYZ as the title company on your providers list for that service. Ultimately, the title company uses a dozen different attorneys and they select the one of their choosing. If the title company provides an invoice listing the actual attorney name, then you put that on the CD. The fact that the title company uses a bunch of different sub-providers is not under the control of the bank. The consumer still picked the title company as their service provider and you are still subject to the 10% aggregate tolerance test on the fees disclosed.

I am not sure what your auditors want you to do - list the 12 attorney sub-providers that the title company might ultimately choose to do the work "for them"???

What are they suggesting that you do - and I don't mean not just throw out some regulatory quote that presents a total impracticality.

Your outside auditor doesn't understand the concept of the SSPL.
The SSPL isnt a list of known providers.
It's a list (of as few as one) provider(s) that your bank would chose to use on the loan in question.
Send them the citations listed above in this thread as backup and forgetaboutit.

Thank you both. You are making me feel much better about this. They requested we review our tolerances since we didn't give them them opportunity to shop. I feel comfortable enough to discuss this with an examiner if questioned in our next exam. If anything comes up I will let you know. Scheduled for 1st quarter of 2020 so it is not too far off. Thanks again.

I went back and reread your post again. I think maybe your auditor is hanging their hat on the bolded part:

Why did you move the charges to B?
They should have stayed in C because they were a result of the borrower shopping.
I bet that's why the auditor is telling you to review for tolerance issues too.