I know this topic has been previously discussed but I just recently had to put together an opinion for a local title company to help them get their software vendor to make changes.

Anyway just a FYI for you to use if needed.

John,

I have not yet been able to speak with anyone out of the FDIC Regional or District offices since our conversation concerning the issues with disclosing fees outside the borrower’s column when that fee is not paid to an outside third party by the title services provider. I am therefore sending you this email with copies to the FDIC and our mortgage department. Hopefully it will help clear up some potential issues you may be having with your software not masking certain charges that are disclosed in Section 1100 of the HUD Settlement Statement.

I reference the following Q&As from the April 2, 2010 RESPA FAQs.

Page 51:

1) Q: What are title services?
A: The term “title services” includes:
1. Any service involved in the provision of title insurance, including but not limited to:
title examination and evaluation
preparation and issuance of commitment
clearance of underwriting objections
preparation and issuance of policies
all processing and administrative services required to perform these functions (e.g. document delivery, preparation and copying, wiring, endorsements, and notary); and
2. The service of conducting a settlement.

Page 52:

2) Q: Where should the settlement agent list the commitment fee, wire fee and other miscellaneous title fees on the HUD-1?
A: The commitment fee, wire fee, and other miscellaneous fees are included as processing and administrative fees that are part of the definition of “title services.” All of these types of fees must be included in the charges shown on Line 1101 of the HUD-1, and are not to be itemized separately (emphasis added).

3) Q: Are document preparation fees included in “title services” or would they appear as separate line item charge in the borrower‘s column?
A: Document preparation fees are part of administrative or processing fees which are included in the charge in Line 1101 of the HUD-1 and may not be separately itemized (emphasis added).

Page 53:

13) Q: If the title agent conducts the settlement, should the charge for conducting the settlement be included in Line 1101 of the HUD-1, with the itemized charge listed outside the column on Line 1102?
A: Yes, the charge for conducting the settlement must be included in the total on Line 1101. If the charge is paid to a third party, (emphasis added) the charge must be itemized outside of the columns on Line 1102.

14) Q: Where do I put the charge for the title commitment on the HUD-1?
A: The term “title services” is defined to include any service involved in the preparation and issuance of the title commitment. See 24 CFR § 3500.2. On the HUD-1, the charge to the borrower for title services, including the charge for services related to the title commitment, must be included in the total in the borrower's column on Line 1101.If a third party prepares and issues the title commitment (emphasis added), the disbursement for this service also must be itemized outside the columns on a blank line in the 1100-series.

Page 54:

17) Q: If state law requires further itemization of title service or title insurance related fees such as a commitment fee or fees for endorsements to a title insurance policy, how should these fees be listed on the HUD-1?
A: If state law requires further itemization (emphasis added) of title service or title insurance related fees than required under RESPA, those fees may be itemized on blank lines in the 1100 series on the HUD-1 with the charge listed outside the borrower‘s column. Endorsements to a title insurance policy may also be listed in Lines 1103 and 1104 as applicable, with the charge listed outside the borrower‘s column.

18) Q: Under the Truth In Lending Act, a settlement or closing fee is generally included in the finance charge, but if a settlement agent charges for a service that the lender does not require and as to which the lender retains no portion of the fee, the fee is not a finance charge. Should fees charged by a settlement agent for services that are not required by the lender or requested by the borrower be listed on Line 1101 and/or Line 1102 on the HUD-1, or separately itemized on a blank line?
A: “Title service” is defined to include ―the service of conducting a settlement.‖ If a settlement agent requires an additional service involved in the provision of title insurance, the charge for that service would be included with the total charge on Line 1101 on the HUD-1. If a fee for the additional service is not a processing or administrative service paid to a third party (emphasis added), it must be itemized outside the columns on a blank line in the 1100-series.

And from Appendix A of RESPA:

Additional sequentially numbered lines in the 1100-series may be used to itemize title charges paid to other third parties (emphasis added), as identified by name and type of service provided.

John, based on the above regulatory references I have to opine that unless the charge is specifically identified to be itemized by the regulation, paid to a third party by the title services provided, or required by state law to be itemized, i.e. the Indiana TIEFF and the new Closing Protection Letter fees, no title services fees are to be itemized inside or outside the borrower’s column.

Thank you for contacting me and discussing the potential issues you may face with your software in an effort to come to a resolution. Again hopefully this synopsis of the requirements will assist in resolving those potential issues.

If you have any additional questions please contact me.

Thank you,

Thanks for sharing that defense, DAn...I've put together similar at prior bank, but apparently did not retain it...this saved some potential time and trouble of reproducing it!

Thanks, Dan!!!

Thanks, Dan! We are currently having this discussion with a couple of our closing attorneys. This will help a LOT.

Wow Becca - you must be excited.

Dang! Stupid stuck mouse!

I'm very thankful that I've had no closing attorneys around here argue about doing this correctly...but you never know!!

For everyone's information. I received an email this afternoon from our field examiner which is located in the FDIC Indianapolis District Office. She agrees with the interpretation that title services fees are not to be itemized unless paid to a third party by the title services provider or are required to be itemized by RESPA or state law.

In addition to this response I also received one from our assigned Review Examiner located in the FDIC Chicago Regional Office. She said she would attempt to have a response by 7/29. I forwarded the field examiner's response to her so that she would have that opinion to include in her review.

I'll post again once I hear from the Regional Office.

Well that didn't take long. The Review examiner from the FDIC Chicago Office just emailed me and agreed with mine and the field examiner's opinion.

So, if you are a FDIC bank in the Chicago Region and have not been requiring your title services providers not to itemize title services charges inside or outside the borrower's column you may want to rethink that procedure.

What exclusion are you relying on to exclude the TIEFF from the finance chage? Not disputing, just curious.

What is the TIEFF?

The TIEFF is part of the title insurance charges paid to the state under IC 27-7-3.6-7. Title insurance charges are exempt from the finance charges under 1026.4(c)(7).

What is the TIEFF?

It's an IN thing.

Title Insurance Enforcement Fund Fee

Thanks! I hate not knowing an acronym...now I know why I wouldn't have had any reason to know it!

Hi Dan...can you please clarify "3rd party" for me? I am struggling with a title agent who is providing the commitment, final title policy etc...and also closing the loan. They have their closing fee in line 1102 outside of the borrower's column. I believe the fee, since the agent is not having a 3rd party close the loan, should be included in Line 1101. Am I incorrect, and not understanding the 3rd party verbiage.

Thank you-

Not Dan, BUT...No, you are correct...it shouldn't be further itemized without an additional 3rd party handling that aspect.

Omg...RR...They are REFUSING to correct my HUD!!

They cannot REFUSE. They work for your bank, not vice versa. Their closing letter states that they will follow your instructions. They may say that they won't insure the closing if you make them change the HUD but that doesn't matter. You must get it corrected.

fwiw, I'd make them correct the HUD and then tell them I'm REFUSING to use them in the future.

(sorry for the rant but I hate when title companies forget who they work for.)

Cheli, RRJ is correct. The closing fee is only to be itemized when the settlement agent uses an outside 3rd party to close the loan on their behalf. If the "closing" agent is an employee of the settlement agent then they are not an outside 3rd party.

This goes away on 8/1/15 however. Under the Integrated Disclosure rules these services will be itemized.

What does the law say in Michigan?? For example, you have to itemize in Texas.

Truffle- They finally gave in...but it came with resistance, escalation, and a "reprimand" so to speak.

Dan -Thank you for the quick response and affirmation of my thought process.

Randy - I was advised that it not required to itemize in MI. (I have read some of your previous posts, and that was the 1st question I asked before requesting the change)...Thanks! :-)