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CFPB RESPA/TILA Rule Reference: 7.4, page 35, CFPB Detailed summary of the rule
What happens when a consumer is permitted to shop for settlement services?
Regulation X provides that where the creditor permits a borrower to shop for third-party settlement services, they will have to provide the consumer with a written list of services, which is separate from the Loan Estimate, for which the consumer can shop. This also has to be provided within the same window of three business days after the application was submitted.
In short, the information that must be included in the list is:
- Identification of at least one available settlement provider for each service; and
- Creditor must state that the consumer may choose a different provider of that particular service
When the GFE was updated in January 2010, it encouraged consumers to shop and compare lenders and services. This is very much in-line with the new Loan Estimate. Consumers will have the ability to shop around, which gives them the opportunity to find settlement services at lower costs.
So how is this going to affect businesses?
Creditors are going to be required to provide a written list of providers (at least one), and obtaining/delivering this information entails some added administrative work. Businesses will need to keep up with the market and make sure the fees are up to date and current. But in the end, this is going to be very beneficial to the consumers, and something businesses will need to give attention to.
Here are a few questions to kick off some comments:
1. How many of you are doing this today?
2. For those who are, what are the biggest hurdles you’ve faced in trying to keep up with this information and deliver it to consumers?
3. How do you view this capability for consumers – a benefit to everyone, or a stumbling block?
4. Do you think that consumers will embrace this, or be overwhelmed at the addition of choice in an already lengthy process?
For more information about the impacts of TILA-RESPA on your business, and how technology solutions can help you overcome them, visit www.TILAPRESPA.com to view a growing knowledge base of information and forums where you can ask questions.
All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.