Correct me if I am wrong, but if the bank does not allow the borrower to shop for services (and doesn't even require certain services - like a survey or pest inspection), then the bank is not required to provide the borrower with a list of providers in the first place, right?

right.

Thought so....okay, another question: Let's say we are doing a purchase and a survey is required (as a condition for title insurance), which block of the GFE would that go into (#3?) and though it was "required" for the title insurance, that doesn't make a Written List of Providers necessary does it?

Title insurance is a requirement of the loan and in order to get it this borrower needs to get a survey.
Survey is paid to a seperate provider.
Are you chosing the surveyor (block 3) or are you allowing the borrower to shop(block 6)?
If you're not chosing, you have to give a list.
Just remember, the list only has to have one name on it. I'd put the one you would normally chose because you know or can find out what their cost would be. That's the cost you put on the GFE. If the borrower choses someone else, you no longer have to worry about tolerance.

Since you do not allow them to shop the fee would go in Block 3. It would not require a providers list. Just remember since you don't allow them to shop all fees are subject to the applicable tolerance regardless of the provider chosen.

Dan, point of clarification please.
There's nothing in the Reg that states who choses is an all or nothing issue that I recall so could Many Hats have chosen all the original providers but allowed the borrower to shop on just the survey?

I'm going to respectfully disagree on the answers received to this question. It sounds to me like the bank is not requiring the survey, the settlement agency is, which means it will go in title services, not block 3/800's. It would also constitue a Change of Circumstances so you can bump up the title services on the GFE in light of this new developement.

TR - They state they do not allow shopping so my answer was based on that statement. If they do allow a service to be shopped it would go in Block 6 however if they don't provide a list it is still subject to the tolerances regardless who chooses or which provider is chosen.

RRJ - The bank requires title insurance and they should know which transactions the title insurance requires a survey on therefore I would challenge it being a changed circumstance without additional information. Also, the FAQ specifically states that third party services required by the lender are disclosed in Block 6 (other than title services) if the borrower can shop for the service or Block 3 if they cannot. The lender requires title insurance and in order to get title insurance the lender must require surveys on certain transactions. Therefore I stand by by response the fee belongs in Block 6 if the customer can shop for the service or Block 3 if they cannot.

Not being argumentive, just curious.

How would you know? Would it depend on whether you were in a platted subdivion vs a rural area?

When I did secondary market loans, we always required a survey and we always required TI, so it would be a no-brainer...but say your policy requires TI on any loan in excess of $500k...how would you know if one would be needed or not. Perhaps it's always needed due to encroachments, boundary disputes, etc...is that the case?

If so, I totally agree with you.

RRJ... there are always exceptions to the rule but as a day to day operation the FI should know what's required to process the loan from appraisals, flood determinations, title insurance down to getting the credit report.

Let's say we are doing a purchase and a survey is required (as a condition for title insurance)

This indicates to me they knew that a survey would be required for a title insurance commitment for a purchase. In our area unless the existing home being purchased is in a platted subdivision a survey is required. If it's new construction a survey is required even if the home is in a platted subdivision to insure there were no encroachment with the construction.

For a purchase transaction IMHO the FI should always know when a survey will be required. That's not to say there won't be the occasional exception where one might be required outside the norm due to something noted in the legal description or recorded in the public records.

Also as a disclaimer I did qualify my statement with: "therefore I would challenge it being a changed circumstance without additional information."

I gotcha...I've been surrounded for so long now with banks that do not normally require TI or surveys, that all I had on the brain were those exceptions whereby an unexpected problem surfaces.

Good convo...thanks!


ETA: I used to LOVE reviewing surveys with title exceptions back in the day! They were always interesting.