December 6, 2009
To Our Valuable Clients:
From: WILLIAMS TITLE GUARANTY AND ESCROW AGENCY, LTD.
RE: NEW RESPA ISSUES PERTAINING TO TITLE INSURANCE
The Real Estate Settlement Procedures Act (RESPA) requires that loan originators (lenders or mortgage brokers) provide borrowers with a Good Faith Estimate (GFE), along with a list of services providers for such services as title insurance, survey, pest inspection and home inspection (among others) The GFE explains that if YOU, as a borrower, use the service providers selected by the loan originator or from the list of providers given to you by the loan originator YOUR costs for such services cannot in total, increase by more than 10%. However, if you choose your own providers, such charges may change at settlement. While “change” can mean increase or decrease, we believe that many borrowers – especially in these difficult financial times – may interpret the GFE language as encouraging you to STICK with providers selected or identified by the loan originator.
We, at Williams Title Guaranty and Escrow Agency, Ltd. want you to know that YOU, as a Borrower, have the right to choose your own provider of title services and title insurance. If you are purchasing a property, RESPA Section 9 prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance. Sellers include individual sellers, homebuilders, and lenders selling real estate owned (REO) properties.
Similarly, settlement service providers – like real estate brokers, agents, mortgage brokers and mortgage lenders – may not tell you which providers to use. They may make recommendations, however they may not steer you or place pressure upon you to use a particular title insurance company. Oftentimes, such providers have an affiliated business arrangement (AFBA) with a title insurance company. In that case, the person making the referral is required, under RESPA, to provide you with an Affiliated Business Disclosure, prior to or at the time the referral is made, which contains the following information, along with the names and range of charges of the referred providers:
Set forth below is the estimated charge or charges for the settlement services listed. You are NOT required to use the listed provider(s) as a condition for (settlement of your loan on) (or) (purchase, sale or refinance) of the subject property.
There are frequently other settlement service providers available with similar services. You are free to shop around to determine that you are receiving the best services and the best rate for these services.
On November 16, 2008, the Department of Housing and Urban Development (HUD) published a “Final Rule” which amends RESPA to include usage of a new Good Faith Estimate (GFE) AND HUD-1 settlement statement forms, to assist you in comparing estimated charges and key loan terms promised at the inception of your loan with the actual charges and key loan terms provided at settlement. In other words, HUD wants to ensure that you get the loan you were promised, on the terms you were promised, and at the cost you were promised.
At Williams Title Guaranty and Escrow Agency, Ltd., our concern is that the language of the new GFE does not go far enough in explaining that you, as a Borrower, have the right to choose you own title insurance company. We believe, if the intention is to fully inform Borrowers of their rights, the GFE should have included the following clarifying language:
There are frequently other settlement service providers available with similar services. You are free to shop around to determine that you are receiving the best services and the best rate for these services.
We, at Williams Title Guaranty and Escrow Agency, Ltd., want to be sure you get the best title services and title insurance protection at the best rates possible. In some cases, it is possible that the providers “selected” or “identified” on Loan Originators’ lists do not provide the best services at the most reasonable prices, (but, instead, have entered into referral arrangements (involving unlawful incentives and inducements) with the Loan Originator making the referral. Such inducements and incentives are in direct violation of RESPA Section 8 and violators should be reported.
We, at Williams Title Guaranty and Escrow Agency, Ltd., believe that knowledge is power. The better informed you are, the better choices you can make for yourself and your family. Therefore, we would like an opportunity to provide you a written quote for title services and title insurance before you make your final selection. Provided the sales price of the home you are purchasing and/or the amount of the loan you are obtaining do not fluctuate, you can rest assured that the charges we quote will not be within a 10% tolerance level. We guarantee them to the penny.
In the event you prefer to use another provider – especially one “selected” or “identified” by the Loan Originator (which may involve a conflict of interest) and you believe you were unduly steered toward such providers or believe any other type of RESPA violation may exist we encourage you to report the incident to HUD.
Department of Housing and Urban Development
Office of RESPA & Interstate Land Sales
Room 9154
451 7th Street SW
Washington, DC 20410
(202) 708-0502
hsg-respa@hud.gov
If you believe you were overcharged for title insurance and would like to report the incident to the state insurance commissioner, please send your information to:
Division of Insurance
1560 Broadway, Suite 850, Denver, CO 80202
(303) 894-7499 - Phone
(303) 894-7455 - Fax
(800) 930-3745 - Toll Free Outside Denver
Thank you for your time. We look forward to providing you a no-obligation quote on Title Services and Title Insurance and answering any questions about the settlement process you may have.
Sincerely,
Williams Title Guaranty and Escrow Agency, Ltd., |
