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The only settlement charges we require which could be shopped for by the consumer would be title services. Would there be any issues if we decided not to allow shopping for title services and thus, no shopping at all for any services related to the loan?
We also have an affiliated business arrangement with a title insurance company. Would not allowing to shop as discussed above be an issue with this in mind?
There are prohibitions against requiring certain affiliates as settlement service providers in Regulation X (see 1024.15).
In regards to your specific example, the title insurance company is an affiliate and you may not require them as a settlement service provider. In addition, if you are referring consumers to use the affiliated title insurance company you should be providing the affiliated business arrangement disclosures required by 1024.15 of Regulation X/RESPA.
Commentary to Reg Z 1026.19(e)(1)(vi)says: Section 1026.19 does not prohibit creditors from including affiliates on the written list required under § 1026.19(e)(1)(vi)(C). However, a creditor that includes affiliates on the written list must also comply with 12 CFR 1024.15. Furthermore, the written list is a “referral” under 12 CFR 1024.14(f).
Also, 1024.16 prohibits sellers from requiring a particular title insurance company, so if your bank is owns and is selling a piece of property keep in mind that, as the seller, the bank can not require the use of a specific title insurance company in connection with a federally related mortgage loan.
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