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At closing, the lenders title insurance was more than 157% more than estimated in the GFE?

I was against a hard deadline to pay off a lien on the house and it was my first time refinancing.  The estimated cost was $675 and the actual was over $1,740. Because of the deadline to pay the lien I went ahead with closing.

At this point do I have any recourse??  
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December 27 2013 - US
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Answers (17)

Hi, Wayne:  I did miss your point.  Sorry. ;)  The relationship between a consumer and a provider - lender, title agent, or Realtor is similar.  I would always recommend trying to work out a resolution with the provider - working your way up the chain of management - before filing a complaint with a regulator or seeking some solution with an attorney.  Reputable providers will always want a chance to provide a clear explanation so a consumer understands what happened and managers and brokers will always want a chance to right a wrong if a member of their staff made an error.

Still, there will be times when the consumer is being stonewalled or perhaps the consumer can't comprehend the situation and due to lack of trust won't accept a reasonable explanation.  I have found that consumers who inform a provider that they will seek assistance from a regulator will test the resolve of the provider and if this is a stonewalling situation, the provider might step up to the plate instead of facing an inquiry.

If the provider is confident that they are in the right they should see the inquiry or complaint to a regulator as a chance to get things straightened out and this confidence might be all the consumer needs to relax and move on.
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December 30 2013
I would love to know who this Lender(?) is.

Or, at least, whether it is a Bank, a Mortgage Banker (often called the confusing moniker "Direct Lender"), or a Mortgage Broker.

It is important for consumers to know what company, or kind of company, thinks they are above the law, or can split hairs regarding the title company's exact name, when it appears, to me, to be close enough.

This sounds like a large depository institution to me.

The semantics arguement, regarding compliance, is ludicrous avoidance of culpability.
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December 30 2013
Send a certified letter to the mortgage lender's compliance officer advise them that you were not given an opportunity to shop for title services - that your loan officer selected the provider without input from you. Under that circumstance, the title provider selected by your loan officer should have been listed on the provider list.  The loan officer is supposed to be familiar with the fees of providers whose names are given to the consumer.  This is the entire purpose of the 10% tolerance rule.

The mortgage lender has either complied with this rule or they have not. Tell them you will seek assistance from the Department of Banking, CFPB, and perhaps the state attorney general. If they are confident of their compliance, they should not be concerned about you filing a complaint as they will have no problem defending their position.

If they still refuse to cure the problem, then file the complaints - period - and let the chips fall where they may.

PS The CFPB is the agency directly responsible for the compliance of the Good Faith Estimate.
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December 30 2013
It is unfortunate that matter could not be resolved by requested lender agreeing that a tolerance cure was valid. You will have to decide if spending time pursuing matter is worth the effort .
Diane.... my last response was to pose a "what if" scenario if this had been about a real estate transaction issue and not a lender involved issue. Going from A - Z sometimes misses an opportunity to settle issue around the M effort level. Unfortunately in this case it looks like Z is the only option.
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December 30 2013
If the lender did indeed choose the provider then they provided an inaccurate Provider Form and theoretically could be held accountable.  It may be a little harder to prove your case though.  I would contact the compliance officer and ask him/her to show that you or someone other than the lender chose this title company. I will be honest, this may end up with you just beating your ahead against the wall but according to the spirit of the GFE this is a violation
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December 30 2013
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Thank you all again for your input and recommendations!  It's surprising how much you can learn once you feel cheated. 

Unfortunately, the Lender's compliance department does not believe a cure is required in this instance. Their Chief Compliance Officer, notified me that the "Written List of Service Providers" document listed "Stewart Title of North Texas" as the title company.  The actual title company chosen (by the Lender) to provide title work was "Gracy Title, a Stewart company."  For this reason, the Chief Compliance Officer believes the Lender is not held to the 10% tolerance requirement.

I want to just reiterate that I did not shop for, request, or have any input on the title company chosen. Additionally, the names of the title company's are strikingly similar.  Can a Lender provide a list of service providers and choose one not on the list to perform the service?  This kind of practice, on its face, appears to be a scam/loophole that attempts to bypass the intent and purpose of a GFE. 

I hate to "hog" the advice board, but any further advice/recommendations are greatly appreciated. 
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December 30 2013
The real estate broker is not a compliance party to the relationship between the consumer and their mortgage lender as that applies to the GFE.  The consumer should first attempt to resolve their problem with the mortgage lender.  If the lender is not cooperative the consumer will need the assistance of the regulatory bodies having authority over the licensed mortgage lender.  These would be the Department of Banking at the state level and the CFPB at the federal level.

A mortgage lender should be able to rectify or cure a GFE tolerance problem once it comes to the attention of their management or compliance department.  If the file has been reviewed by management or compliance department and they see no reason for a cure then they should be able to communicate this to the consumer in a way that makes sense.

There are unfortunately some cases in which a mortgage lender is not acting in good faith and in those cases a consumer needs to know that they can get resolution or at least a better explanation by seeking help from the regulators.  Sometimes just telling a lender that you intend to contact the regulators is enough to produce a good end - clarity or a cure - and that's what this question is all about.

He wants recourse, meaning a fix, or if he is not due a fix, he needs the lender to clearly lay out what happened in a manner that he can understand.  Otherwise, he feels cheated and I don't blame him.
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December 30 2013

Diane,
I assume you would recommend a buyer contact their real estate broker to resolve issue(s) to their satisfaction if a possible civil or ethical violation occurred during their real estate transaction prior to filing claim with state Real Estate Commission, local Assoc of Realtors, or hiring an attorney. The law governing the GFE is very clear, and any lender's compliance dept. would resolve a violation without needing to involve CFPB. That would be next course of action if lender didn't resolve issue to consumers satisfaction.
Hopefully that will not need to happen as lender could resolve in a matter of a day or so.

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December 30 2013
Hi, Wayne:  The responses given will work so long as the mortgage lender cooperates.  Consumers need to know that they have options if they are working with a lender who is non-responsive and non-compliant.  Most mortgage lenders do things right but there are the rare exceptions.  If a consumer is faced with that type of situation, knowing who to call helps. ;)
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December 30 2013
Diane,
REALLY........ 4 lender's gave accurate answer's including resolution for consumer.
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December 30 2013
If the lender did not allow you to shop for title services and selected the company, file a complaint with the state banking department and the Consumer Finance Protection Bureau OR let the lender know you will file complaints if they do not make an adjustment or provide a reasonable explanation for the bait and switch.  This federal form is meant to protect a consumer from bait and switch.
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December 30 2013
There is a Service Provider Form that you should have received with your initial paperwork.  Lenders have to state where they got their estimates from for some of these services such as title insurance.  If that company is the one listed on the form, then the 10% rule would apply unless there was a valid change of circumstance.
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December 27 2013
If you look at the top of Page 3 of your GFE, it shows clearly the second column 10% tolerance for title services (if lender selected or you select one identified by lender).   

I would start by speaking with the settlement agent to have them correct the HUD to move the title and settlement charges into the 10% section and be sure that HUD is reviewed by the funder at the lender.    If that doesn't solve the problem you could send your corrected HUD and Initial GFE to the compliance department of the lender with request to receive your tolerance cure.

If the settlement agent refuses to correct the HUD (by saying they must follow the lender instructions), ask your Loan Originator to speak with the Doc Prep person to have those corrected and moved into the proper location.  
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December 27 2013
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Thank you all for your answers, they are very helpful.  I'm not 100% sure whether the title company chosen was provided in their initial disclosure, but I know that I did not have any part in selecting the title company.  The Lender chose all of the third party services.

Just to follow up on the details of the GFE and closing fees:

GFE box #4 estimated "Title services and lender's title insurance" as $675.00.

HUD Page 2, Item 1100 - "Title Charges" totaled more than $1,740.00.  This included:
    1102 "Settlement or closing fee to the title company" = $250.00
    1104 "Lender's title insurance to the title company" = $1,171.20
    1113 "Tax certificate to title company" = $48.00
    1114 "Overnight/Courier fee to title company" = $45.00
    1116 "Document preparation to Law Firm" = $75.00
    1118 "Mobile Notary Fee" = $175.00

(The numbers don't exactly add up because the lender sent me a HUD through email that differed from the actual HUD at closing -- I only have access to the emailed HUD at the moment)

On page 3 of the HUD where the GFE is compared to the HUD charges, "Title services and lenders title insurance" is listed under the "Charges that Can Change" and thus isn't considered in the comparison for "Charges that in Total Cannot increase more than 10%."

From the answers, it appears that this was improper and should have been in the Charges that cannot increase more than 10% -- correct?

Also, regarding Dave Skow's question, does "Title Services and Lender's Title Insurance" (i.e. GFE #4) not include settlement fees (e.g., $250.00 settlement fee to the title company)?  If not, are there other fees in Item 1100, that should not be compared to the GFE #4?




  
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December 27 2013
Justin is correct and lender actually has 30 days to cure a tolerance issue. If lender selected the title co the fact that closing has occured should not negate their liability.
Who selected the title co? Is that same company listed on Service Providers List from lender in Disclosure package at time of application?
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December 27 2013
Dennis .....

1) have you asked the lender / loan officer  or title insurance firm about this ?  if not - you should

2) are you sure than the $1740 figure is not  a total of both the title ans settlement  fees ?
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December 27 2013
If YOU selected the title insurer and the charge was in Box 6 of the initial GFE, then there is no tolerance thresh-hold and you are required to pay the vendors fee.   If the insurer was selected by the lender and disclosed on your initial GFE in Box 4, then the entire Box 4 cannot increase by more than 10% from initial or last disclosure and if it does the lender is required to apply a cure at closing for the difference. 
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December 27 2013
 
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