In fact, Morgan gives several good points on what to look for which actually supports my comment. I do, however, disagree with him on the 7 questions he suggests to ask an originator. I think these questions could alienate a potentially good source which is something you definitely don’t want to do, as hard as they are to come by.

Using the GFE or quotes that contain the right information along with asking the right questions is the answer to finding a good deal with the right originator. You just need to know what questions to ask and what items to compare. That’s the secret to the game!

On my GFEs my YSP is disclosed as “Lender paid YSP 0-2%”… our compliance officer has us do that. The only time it is different is if we 100% know what the YSP will be and if it is higher…

Once I did 0-1% because I was not going to take more than 1%

The hard thing to come to grips with in this discussion (which I know will lead to more controversy) is that most of my clients float their rates!!

If I agree to a rate, I agree to them that I may not make as much money as I expected to but they’ll still get that rate… and if YSP ticks over 2%, I’ll drop the rate. That is my guarantee!

YSP has to be disclosed 72hrs prior to closing here… for floaters that is still a bit early!!

but mainly, YSP should not be a way to compare loans… it just may mean one person is getting a better deal from a lender – they do more loans so they get a better rate… so why should they get penalized… and why should the consumer care. If all the rates and all the fees are identical – why would they want someone that makes less? What difference does it make?

Care to expand on this in greater detail Craig?

“I think whoever is obligated to purchase the title insurance policy would under the law, have the right to select the title company.

In most cases, the purchaser is responsible for the lender?s policy so it would be the ?buyer? and not the ?seller? who ultimately gets to choose.”

The Seller is usally controlling becuase they are providing the main title policy which is considerably more expensive than the Lender’s policy. That is why the Seller usually chooses. The law actually states that the Buyer may choose in all cases, however, they would have to pay for the the main title policy instead of the Seller.

No one usually cares that much since title companies are relitively independant and most have to file rates with their respective State Insurance Departments and as such, are similar in fees in most cases.

Here is what I do –

If I talk to them before they have a property and identified a seller:

I use our in house title fees for a purchase transaction and explain to them that these fees are typical of the title charges associated with a purchase but may be off based on the title company used in the transaction.

As soon as a property is found by the buyer and a purchase contract has been executed I call the escrow officer responsible for the escrow of the transaction and get an update of the title and escrow fees for their company. I then update and redisclose the Good Faith Estimate with the updated fees from title and escrow. I do this usually on the same day that I have been notified by the buyer that they have a purchase contract accepted by the seller.

Then I go over with the borrower the changes in the cost based on what was estimated initially.

If the borrower comes to me with a purchase contract completed (not what I recommend at all, by the way) I do the following:

Take a complete application and inform them that I need to speak with the escrow officer handling the transaction before I can properly complete the Good Faith Estimate. I then call the escrow officer and get their fees.

If the fees that come back are way out of line with what I have seen I will let the borrower know that I think the fees are excessive; and that he should talk to his Realtor about the charges.

I also always suggest getting concessions from the seller in terms of seller-covered closing costs so that the money put down by the buyer goes primarily toward the home and not toward ancillary fees and charges.

I have a follow-up question on this. If someone applies with you for a purchase loan, how do you know who they are going to use for title fees and closing?

Do you wait for someone such as the realtor or actual title company to contact you, or do you ask the borrower who they will be using?

This seems to be another gray area that leaves the customer in the lurch as to who does what and for for how much when it comes to home loans. Very little of what I have found makes sense in this business. No wonder the consumer usually gets a royal screwing and from multiple directions and sources.

From what I have seen customarily the seller does decide. Although I am curious as to why that is based on the RESPA quote you’ve cited. I’m not a Realtor so I will ping a few of my real estate colleagues and try to get to the bottom of this for you.

I’d like to know for myself as well!
Morgan

Are you sure it is the seller who decides? That seems to go contrary to what HUD states:

“Choice of Title Insurer. Under RESPA, the seller may not require you, as a condition of the sale, to purchase title insurance from any particular title company.”

I think whoever is obligated to purchase the title insurance policy would under the law, have the right to select the title company.

In most cases, the purchaser is responsible for the lender’s policy so it would be the “buyer” and not the “seller” who ultimately gets to choose.

I remember when I sold my condominium a few years ago I wanted to use the title company that works with my firm and the selling agent was really insistent that it could slow down and gum up the process. I ended up choosing their title company in exchange for a concession on some of the transaction fees the real estate company charged us.

I agree that loan originators can provide guidance on a purchase when it comes to title fees. Most companies are rather competitive and so an “estimate” from an in-house title company on purchase-based fees is appropriate and expected.

I can’t speak for Vicki but perhaps the term “ignore” is too strong. Perhaps “take with a grain of salt as a place-holder estimate” is more appropriate.

If the loan originator is informed of who the title company is on the transaction a good originator should pick up the phone and ask for the title fees before issuing the GFE; or if not possible should reissue the GFE if the title fees are materially different from those quoted originally.

Great point Jim.