We are a deed of trust state. We do not prepare the deed of trust and accompanying credit agreement for real estate secured mortgages in-house. Instead, we have local attorneys prepare them for us. The customer may choose which attorney so long as the attorney is on the Bank’s board-approved attorney listing.
Which of the following options would this be quoted under?
A. Lender Attorney Fee under Origination Charge – 0% Tolerance
B. Title – Document Prep under Cannot Shop – 0% Tolerance
C. Title – Document Prep under Can Shop – 10% Tolerance
I’m assuming we’re talking about the new Loan Estimate so my answers are based on those portions of Regulation Z. Since you are requiring the borrower to select an attorney from a list you aren’t allowing them to shop so it would be a 0% tolerance charge(1026.19(e)(1)(vi). I don’t believe it would be an origination charge since it isn’t being paid to you as the creditor/loan originator (1026.37(f)(1)) so it would be included in the services you cannot shop for. “Lender’s Attorney Fee” would be included under “Services You Cannot Shop For” (1026.37(f)(2)). If an attorney’s fee is for conducting closing or any component of title insurance services then it should include the word “title” in the description. The commentary also gives a list of what constitutes “title insurance services”: https://www.bankersonline.com/regs/12-1026/12-1026-037.html#37f.