You have to have a title company and the creditor of course has to give the borrower the opportunity to choose that company. If the borrower does not choose, then presumably they’ve taken the creditors’ default option on the list of settlement service providers. If the consumer was not permitted to choose an unlisted title company, the title fees would be subject to zero tolerance assuming the creditor requires a title search and everything else to insure that it has good title.
However, before I set the world on fire, let me amend that to say that it depends on whether the creditor gave the borrower the opportunity to shop. So if the creditor gave the borrower the opportunity to shop for title services, which they are required to do, and to go off of the list of settlement service providers and the borrower simply failed to do so, that would be in the 10% bucket category, not zero percent tolerance. As long as the borrower is given the opportunity to shop off of the list, 10% tolerance applies.
Note: This transcript has been edited from the February 2015 TRID webinar for clarity and completeness.
Answered By: Ben Olson