[Kristin]

We are considering using Loan Estimate (formerly Smart GFE). Since it is common that real estate agents choose the settlement agent can we choose a nationwide company for the fees then come back later once we receive the fees from the company the real estate agent chose?

[Kristin]

I want to add to this that in most cases we would know at the time of disclosure who the customer wants to use – but it will be very time consuming to set all possible settlement agents in the system. Does this make a difference?

[rcooper]

If you are allowing the borrower to shop for the settlement agent then you would be providing them with the list of providers and, assuming the borrower chooses a provider from your list, the fee would be subject to the 10% tolerance threshold. If you aren’t allowing the borrower to shop or do allow the borrower to shop and didn’t give a list of providers, the fees would be subject to the 0% tolerance threshold. Finally, if you allow the borrower to shop and give the list of providers and the borrower selects a provider not on the list then the fee is not subject to any tolerance threshold.

It sounds like you are allowing the borrower to shop for the settlement agent, so I am assuming you are providing a list of providers. If so, you are fine to disclose a fee from a provider on that list. If the borrower selects someone not on that list then the fee is not subject to any tolerance. If they do select someone on the list the fee is subject to the 10% tolerance rule.

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