(This is Day 7 of 12 in a series called "The 12 Days of RESPA Reform" which will run until December 31st. For a full list of RESPA topics, check here.)
As we discussed yesterday, loan costs are divided into one of three categories: (1) those that cannot change from initial GFE disclosure, (2) those subject to a 10% tolerance, and (3) those that can change. For title fees, whether the cost belongs in bucket #2 or #3 will depend on whether the lender "identified" the settlement service provide on a written list. In short, where the lender identified the particular settlement service provider, they are subject to the 10% fee tolerance.
Some more points regarding the "identifying" of the settlement service providers:
- If a loan originator is to allow borrowers to shop for third-party settlement services, he is to do so via a written list of providers.
- A borrower does not need to select a company from this list, but if she does the tolerance applies.
- If a borrower selects a company not on the the written list, the tolerance does not apply.
- A loan originator may include an affiliated business on the written list of providers, but must also provide the "affiliated business arrangement disclosure."
Source: HUD.gov's "New RESPA Rule FAQs"
Tomorrow's topic will be "The Shopping Cart"....