TRID Settlement Service Provider List (SSP List)

Transcription

1 TRID Settlement Service Provider List (SSP List) Overview The rule permits lenders/mortgage brokers to provide borrowers the ability to select third party service providers. By doing so could favorably affect the tolerance thresholds for fees disclosed on the Loan Estimate. The rule also permits lenders/mortgage brokers to provide the borrowers a list of Services a borrower may NOT shop. These services are provided by persons other than the lender/mortgage broker. If the lender/mortgage broker permits the borrower to shop for a required settlement service(s), and the borrower (1) does not select a settlement service provider, (2) selects a settlement service provider identified on the SSP List, or (3) selects a service provide not list on the SSP List then the amount charged for that service moves from the Zero Tolerance threshold to either the 10% Cumulative or Tolerance Free thresholds as on the TRID Tolerance Thresholds Quick Reference. Impac Mortgage Corp. Policy It is the policy of IMC to require all mortgage brokers issuing an LE to provide the Settlement Service Provider List at the same time for, at a minimum, the following services the borrower may shop for: Title and title related services Escrow/Settlement Agent related services Pest Inspection Any other inspections the mortgage broker is aware of at the time the LE is prepared. NOTE: SSP List is not permitted for any fee paid to an affiliate of the mortgage broker or lender, i.e. brokered owned escrow company. REQUIREMENTS OF THE SETTLEMENT SERVICE PROVIDER LIST Timing of SSP List If the lender/mortgage broker permits the borrower to shop for a settlement service, the lender/mortgage broker must provide the borrower a written list of service providers within 3 general business days of receiving an application (same time as the initial LE). The borrower then has the ability to select a service provider from that list, or shop around and choose a different service provider. Format of the SSP List Services You Can Shop For The lender/mortgage broker must list the settlement services for which the borrower is permitted to shop on the prescribe form as required under the rule. The form must include the following: Must be a separate document and cannot be made part of the Loan Estimate. Must identify at least one available settlement service provider for each service. Must be listed in alphabetical order. Compliance: TILA-RESPA Integrated Disclosures (TRID) Page 1 of 5 Version

2 Provide sufficient information to allow the borrower to contact the provider, such as the service provider s names, address and telephone number. The provider is open for business and provides services where the property is located. State that the borrower may choose a different provider of that service. The service providers must correspond to the services and fees disclosed on the initial LE. o Actual charge. Generally, the amount charged to the borrower for any settlement service may not exceed the amount actually received by the settlement service provider for that service. o Average charge. A lender/mortgage broker or settlement service provider may charge the borrower or seller the average charge for a settlement service if the following conditions are satisfied: a) The average charge is no more than the average amount paid for that service by or on behalf of all borrowers and sellers for a class of transactions; b) The lender /mortgage broker or settlement service provider defines the class of transactions based on an appropriate period of time, geographic area, and type of loan; c) The lender/mortgage broker or settlement service provider uses the same average charge for every transaction within the defined class; and d) The lender/mortgage broker or settlement service provider does not use an average charge: For any type of insurance; For any charge based on the loan amount or property value; or If doing so is otherwise prohibited by law. The word Title is required to appear at the beginning of each service related to the issuance of title insurance policies. Examples include but are not limited to: o Examination and evaluation of title evidence to determine the insurability of the title being examined and what items to include or exclude in any title commitment and policy to be issued, o Preparation and issuance of the title commitment or other document that discloses the status of title, identifies the conditions that must be met before the policy will be issued, and obligates the insurer to issue a policy of title insurance if such conditions are met, o Resolution of title underwriting issues and taking steps needed to satisfy any conditions for the issuance of title insurance policies, o Preparation and issuance of the title insurance policies, and o Payment of premiums Third party service providers affiliated with the lender/mortgage broker may be listed on the written SSP List; however, this is considered a referral under RESPA and requires a separate affiliated business arrangement disclosure to be provided. No more than 14 Services You Can Shop For may be listed on the SSP List. If there are more than 14 Services You Can Shop For, disclose the total amount of the items that exceed 13 with the label Additional Charges. An addendum to the Loan Estimate cannot be used to disclose the additional items. Compliance: TILA-RESPA Integrated Disclosures (TRID) Page 2 of 5 Version

3 Optional: May include a statement on the written list that the listing of a settlement service provider does not constitute an endorsement of that service provider. Sample completed Settlement Service Provider List Services You Can Shop For. Examples of services a lender /mortgage broker might permit the borrower to shop for include, but are not limited to: Pest inspection fee, Survey fee, Title closing agent fee, and Title closing protection letter fee. Services a Borrower May not Shop For The lender /mortgage broker may also provide a written list of services the borrower may NOT shop for. This list must be clearly distinguished from services the borrower is permitted to shop. These services must be clearly and conspicuously distinguished from the services the borrower is permitted to shop. This may be accomplished by placing the services under different headings. Examples of services a lender /mortgage broker might NOT permit the borrower to shop for include, but are not limited to: Appraisal fee, Appraisal management company fee, Credit report fee, Flood determination fee, Government funding fee (such as a VA or USDA guarantee fee, or any other fee paid to a government entity as part of a governmental loan program), Homeowner s association certification fee, Lender s attorney fee, Tax status search fee, Third-party subordination fee, Title closing protection letter fee, Title lender s title insurance policy, and Upfront mortgage insurance fee (unless the fee is a prepayment of future premiums or a payment into an escrow account). Compliance: TILA-RESPA Integrated Disclosures (TRID) Page 3 of 5 Version

4 Format of the SSP List Services You Can Shop For Must be a separate document and cannot be made part of the Loan Estimate. Must be listed in alphabetical order. The word Title is required to appear at the beginning of each service related to the issuance of title insurance policies. Examples include but are not limited to: o Examination and evaluation of title evidence to determine the insurability of the title being examined and what items to include or exclude in any title commitment and policy to be issued, o Preparation and issuance of the title commitment or other document that discloses the status of title, identifies the conditions that must be met before the policy will be issued, and obligates the insurer to issue a policy of title insurance if such conditions are met, o Resolution of title underwriting issues and taking steps needed to satisfy any conditions for the issuance of title insurance policies, o Preparation and issuance of the title insurance policies, and o Payment of premiums No more than 13 Services You Cannot Shop For may be listed on the SSP List. If there are more than 13 Services You Cannot Shop For, disclose the total amount of the items that exceed 12 with the label Additional Charges. An addendum to the Loan Estimate cannot be used to disclose the additional items. Sample Combined Settlement Services Provider List with Services You Can Shop For and Services You Cannot Shop For. Subsequent Loan Estimates and Settlement Service Provider Lists There is some flexibility in disclosing individual fees by the focus on the cumulative amount of all charges. A lender /mortgage broker may charge the borrower for a fee that would fall under the 10% cumulative tolerance but was not included on the initial Loan Estimate, regardless of whether there is a valid change of circumstance or not, so long as the sum of all charges in this category paid does not exceed the sum of all estimated charges by more than 10%. When this happens a revised Loan Estimate is not permitted to be issued to the borrower; however the 10% cumulative total must be tracked. Once the threshold is exceeded there are two (2) options that could apply: Compliance: TILA-RESPA Integrated Disclosures (TRID) Page 4 of 5 Version

5 1. If there is a valid change of circumstance totaling a revised Loan Estimate may be issued resetting the 10% tolerance threshold; or 2. If there is not a valid change of circumstance a revised Loan Estimate may NOT be issued. The final fees on the Closing Disclosure will be compared to the previously disclosed Loan Estimate and if the thresholds are exceeded a cure must be issued to the borrower. Qualification of Service Providers Lenders/mortgage brokers may impose reasonable requirements regarding the qualifications of the settlement service provider. For example, the lender/mortgage broker may require that a settlement agent chosen by the borrower to be appropriately licensed in the relevant jurisdiction. Record Retention Lenders/mortgage brokers are to retain evidence of compliance for three years after the later of the date of consummation, the date the SSP List is required to be made, or the date the action is required to be taken. Evidence of required actions. The lender/mortgage broker must retain evidence that it performed the required actions as well as made the required disclosures. This includes, for example, (1) evidence that the lender/mortgage broker properly differentiated between affiliated and independent third party settlement service providers for determining good faith; (2) evidence that the lender/mortgage broker properly documented the reason for revisions; or (3) evidence that the lender/mortgage broker properly calculated average cost correctly Impac Mortgage Corp. NMLS # Rates, fees and programs are subject to change without notice. Other restrictions may apply. Information is intended solely for mortgage bankers, mortgage brokers, financial institutions and correspondent lenders. Not intended for distribution to consumers, as defined by Section of Regulation Z, which implements the Truth-In-Lending Act. Licensed by the Department of Business Oversight, under the California Residential Mortgage Lending Act (License # ). Compliance: TILA-RESPA Integrated Disclosures (TRID) Page 5 of 5 Version