We allow our borrowers to shop for a closing agent. We list one closing agent on the SSPL. If the borrower selects that closing agent off our list, we list a description of the title services under Section C "Services Borrower Did Shop For" on the LE and CD. However, we are running into issues with the Closing Protection Letter fee. The closing agent on our list outsources the Closing Protection Letter to a different third-party. Because this fee is paid to a different company than the closing agent, our system is throwing the fee into Section B "Services Borrower Did Not Shop For" on the CD.

What is the correct way to display this on the CD? Should we list the Closing Protection Letter under Section C Did Shop since the borrower actually selected the closing agent who outsourced the fee? Or do we list it under Section B Did Not Shop since the borrower is not able to select this company himself?

Your question is kind of mixed up. You said the provider on your list is outsourcing, right?

On the LE, Section C is the correct place for fees for a shopable service go as long as you give a valid SSPL.

Section B is did not shop and that's where the fees for any provider you show on your SSPL and the borrower uses must go on the CD.

If the title company on your SSPL is using a third party provider, that goes in B too because the borrower was not allowed to shop for it nor was it on your SSPL.

So that would change our tolerance for the Closing Protection Letter from 10% (we allowed shop and borrower choose off our list) to zero tolerance (we allowed shop and borrower choose off our list, but since the service was then outsourced the borrower technically wasn't allowed to shop?)

TR confused me too.

If you listed the CPL in C on the LE and they selected from your list, then that charge would move to Section B on the CD and be subject to the 10% aggregate tolerance test - regardless of whether your preferred service provider outsourced it to another party or not

I thought I wrote that pretty clearly and I stayed away from throwing tolerance numbers in to try to help the clarity.

I found this part of the OP's post confusing and incorrect:


The borrower should not see the list or chose a provider prior to the LE. If you allow shopping, the fees go in C.

But if the borrower does chose the provider on your SSPL, the charges move to B on the CD. As Randy stated too, that would be ALL the title charges, even any the title company outsources.

I apologize, my initial post was inaccurate. I should not have said LE "and CD"... I'm not sure why I'm having such a hard time wrapping my brain around this.

If we allow shopping, the title services go in Section C on the LE. Let's say the borrower decides to shop and chooses a provider NOT on our list. On the CD, this would be reflected in Section C. But the provider they selected outsources the CPL to another company. This would cause the fee for the CPL to move to Section B on the CD.

All of the title fees would have an unlimited tolerance, except for the CPL. It would have a 10% tolerance even though the borrower could not shop for it?

If they selected a different title services provider than what was on your written provider list - everything stays in Section C and is unlimited tolerance, regardless if the provider they selected outsourced the service or not. You have no control over that..