Last month a rather interesting meeting took place between Federal Reserve Staff and the Real Estate Services Providers Council (RESPRO). When you have a few minutes, I strongly recommend taking a look at this report presented as evidence by RESPRO to the Fed regarding the potential impact of the Dodd-Frank Act on creditors with affiliated business agreements, or check out the embedded document below.
The concern is over the term “qualified mortgages,” which are mortgages that Congress believes are less likely to cause problems for borrowers. To be deemed a “qualified mortgage” the total “points and fees” paid by the borrower must not exceed 3 percent of the loan amount.
The concern is that if a borrower uses a lender’s affiliated title company, the fees charged by that title company count toward the 3 percent threshold, while they would not count if the borrower uses a non-affiliated title company.
The recommended solution was, of course, to create a “narrow exemption” for affiliated title companies, “so long as the fees are reasonable.” It goes on to suggest that there “are numerous ways for federal regulators to enforce this “reasonableness” requirement.”
One suggestion is to go online and compare the affiliated title company’s fees with our very own Federal Title & Escrow Company fees (footnote 7 on page 3).
It is quite a compliment for a combined meeting of the Federal Reserve and RESPRO to cite our website as the example of reasonable fees in D.C., Maryland and Virginia, however, I do not think that they actually used our website to compare the fees as they suggested.
A simple online comparison shows that the fees for local affiliated title companies are ALWAYS higher than our quoted fees. So if we are the standard for “reasonable fees.” then all affiliated title companies in the DC metro area are charging unreasonably high fees.
Also, it is interesting to see who participated in this study. Among the participants was the President of Long & Foster Companies Affiliated Businesses, but there was no representative for non-affiliated businesses. That would be similar to the NFL holding labor meetings but without inviting the union or any player representatives.
Seeing as how the President of Long & Foster Companies Affiliated Businesses attended the meeting and no other representative, I am shocked that a narrow exemption was created (note my sarcasm) and that he declared affiliated title companies’ fees as reasonable (cue to extreme sarcasm).
Maybe the next time that the Federal Reserve and RESPRO decide to hold a meeting that affects the future of the title industry, they can invite multiple representatives from the title industry, rather than just one representative with a clear, biased motive.