Posted by Bear900/CA on 12/17/13 12:08pm
Msg #496362

People of State of Calif. v. Fidelity National

http://oag.ca.gov/system/files/attachments/press_releases/02_116.pdf

Look at 4. A. :

"4. Defendants [FNF], and each of them, are permanently enjoined and restrained from
engaging in any of the following:

"A. Billing or collecting from title insurance or escrow customers an amount
that exceeds the actual cost to defendants of services provided by third parties in connection
with defendants’ performance of escrow and title services, such as overnight mail, courier,
and notary services, unless (1) such practice is permitted by state and federal law and (2)
defendants clearly and conspicuously disclose that the defendants have marked-up the third
party charge.

1. Do states allow title companies to mark-up notary services?
2. Lenders are not allowed to mark-up such services as credit reports or appraisal reports. What you see on the HUD is the exact amount charged.

Reply by Marian_in_CA on 12/17/13 12:30pm
Msg #496363

Yes, but in the case of notary services, what is the "actual cost"? It varies with each notary and each situation.

In the case of a CA notary, the "actual cost" of a loan package might actually be pretty high. Let's say there are 16 notarizations done, by law we can charge up to $160 just for that. Then, we are allowed to charge for other services provided such as for printing, mobile/remote location service and courier services. Those fees aren't regulated, and vary greatly. So, a typical loan package could have an actual cost of $200-$300+ for the notary.

I think they're trying to say that the "notary service" should be limited to the state prescribed maximum fees per signature based on an in-house closing. That's impractical because the services include din the "notary fee" are so much more than that.

Reply by Marian_in_CA on 12/17/13 12:36pm
Msg #496364

BTW... I meant to add on here that it would seem pretty difficult to avoid that "mark-up" unless they did what we kind of all wish they'd do anyway... schedule us way ahead of time and put our fee on the HUD, paying us directly.

That, or simply have a contract with a signing service that says, "Your cost to perform this work is X, no matter what."

We know that these companies like to use the notary fees as a profit pad and then lowball us to death. It would be nice if that wold actually stop. Sadly, there are still too many notaries out there who don't have a clue about pricing their services.

Reply by CH2inCA on 12/17/13 12:37pm
Msg #496365

The actual cost

would be what we charged for the job.
They can't list 300.00 when the notary is only getting 100.00.

:0) Great! No more borrowers looking at me cross eyed thinking I made some serious bank during that one hour I spent at their closing!

Reply by Marian_in_CA on 12/17/13 12:46pm
Msg #496371

Re: The actual cost

I can only hope this means that the low-balling would stop... if they can't pad that fee for profit, there's no reason at all to low-ball the notaries. Just say, "Hey how much do you charge for this?"

Of course... that all changes if they hire a signing service who then farms out the work.

But then... why hire a signing service when all you have to do is assign a file off to an approved notary at a contracted rate? I mean, one of my TCs does this... they limit the notaries they use and so when a job comes in for my area, the job is mine, no matter what. My fee is already established... and it is quite high, but I get paid directly and I'm listed on the HUD. It's simple.

Reply by Bear900/CA on 12/17/13 12:54pm
Msg #496373

Re: The actual cost

That's the heart of this issue Marian and why I brought it up. To get their full fee, notaries should deal direct with title on a set price. That is now a problem with the FNF letter sent out to control notaries, or soon will be.

Hope you can tell I'm lookin for a way out of this for everybody.

Reply by Bear900/CA on 12/17/13 12:42pm
Msg #496368

That is all correct. I believe the CA case is talking about the "actual cost" charged the customer regardless of the cost of business to the notary.

For instance, if the title company quotes a loan originator $250 for notorial services and I include that on my GFE, are they allowed to keep a portion of that as a profit?

Reply by Jack/AL on 12/17/13 12:45pm
Msg #496370

"Notarial services," not "notorial services." n/m

Reply by Notarysigner on 12/17/13 12:44pm
Msg #496369

Thanks Bear for the info. I don't see much changing though. For example, how about that "pad" we always see on the HUD1? The borrowers are told they will get that back but we never know if it occurs.

Maybe they'll call it "negotiable SS Fee to notary."

Reply by Bear900/CA on 12/17/13 12:49pm
Msg #496372

It's good to hear your thinking. I have never told a customer that 'excess fees' would be given back and have nowhere seen that happen. Just my experience though.

I agree, our fee is padded, but have you ever seen this disclosure?:

"unless (1) such practice is permitted by state and federal law and (2)
defendants clearly and conspicuously disclose that the defendants have marked-up the third
party charge."

Reply by Pam/NM on 12/17/13 12:56pm
Msg #496374

Had an e/o tell me once that the notary fee included

things such as trailing docs fees, extra trips, even the infamous Allonge that we (as front line, closing table notaries) are not a party to...just a thought

Reply by Notarysigner on 12/17/13 1:38pm
Msg #496378

No Bear, never seen that or a disclosure to that affect.

It has been my experience when borrowers question THAT pad, when I call the LO to explain the answer I have ALWAYS HEARD was..."Oh, that'll be refunded after the loan closes."

Reply by Bear900/CA on 12/17/13 3:15pm
Msg #496395

Re: No Bear, never seen that or a disclosure to that affect.

Yes, I hear you. Unfortunately, that is an easy go-to answer during settlement. Excess funds from payoffs or over-calculation of interest is what is generally refunded.

On FEES, the amount is a known quantity and needs to be on the final HUD-1 as an*actual charge* per RESPA.

http://www.hud.gov/offices/hsg/ramh/res/respa216.cfm

"Disclosures at settlement. (1) The HUD-1 Settlement Statement is required to show the actual charges at settlement."

In some cases RESPA allows for rounding but notice the restriction:

http://www.gpo.gov/fdsys/pkg/CFR-2010-title24-vol5/pdf/CFR-2010-title24-vol5-sec3500-8.pdf

24 cfr § 3500.8 b 2
"2) Use of average charge. (i) The average charge for a settlement service shall be no more than the average amount paid for a settlement service by one settlement service provider to another settlement service provider on behalf of borrowers and sellers for a particular class of transactions involving federally related mortgage loans. The total amounts paid by borrowers and sellers for a settlement service based on the use of an average charge may not exceed the total amounts paid to the providers of that service for the particular class of transactions."

I’m not sure of the CFPB’s new rule on whether I am allowed to average. I read plenty that I must list my actual costs for a credit report and other fees. I cannot put $20 when it is $16. Some UW’s have asked me for copies of receipts. I don’t mind and feel protected by keeping records.

When I get a chance I will write the CFPB and copy our insurance commissioner regarding the rendered judgment. The curious case of benjamin button.

Ben

Reply by JanetK_CA on 12/17/13 4:57pm
Msg #496411

I've heard that that practice is more common in Southern California than in Northern California, for some reason. Many times, I've seen it be referred to as a "refundable pad" right on the HUD. That potentially covers unanticipated costs such as extra recording fees, courier fees, and who knows what else. I suppose that could also include additional notary fees, like having to go back for a Grant Deed or Subordination Agrmt they forgot. Lots of possibilities. In those case, the HUD is marked as "estimated", and do a final HUD/Settlement Statement before they disburse.

As for whether or not the excess actually gets returned to borrowers, Bear might have visibility to that as a loan broker, but I'm usually on to the next signing and don't have further contact with borrowers if it doesn't. I've never heard anything to the contrary, so I assume it does.

Reply by Bear900/CA on 12/17/13 7:04pm
Msg #496432

I should have said “excess notary fees”.

Yes, I have seen $300 pads together with a $250 notary fee that is also an obvious pad. That says a lot to me about lack of due diligence and not working closely with escrow. Poor customer service in my book.

The judgment against FNT was about “billing and collecting” costs of “services provided by third parties in connection with escrow and title services, such as…notary services.”

That would indicate they are making a profit and not refunding part of the notary fee if it is excessive.

It will be great to see that if they are making a profit on the notary fee, that they must “conspicuously disclose” it to the customer. Hopefully, that opens the door a little wider for the notary to negotiate directly.

More importantly, it gives the notary a chance to step-up into a provider position, if that’s conceivable. That’s where I was heading with this.

Reply by BrendaTx on 12/17/13 6:54pm
Msg #496431

I have always thought that notary services on the HUD were just that, NOTARY FEES, NOT signing agent fees.

I do not think that any state allows mark up of those services.

Reply by Bear900/CA on 12/17/13 7:06pm
Msg #496434

Only 49 more states to check, as the CFPB left it up to them. *Disclosing* a profit however is now mandatory.

Reply by ReneeK_MI on 12/18/13 5:57am
Msg #496454

@Bear - notary fees as line item & APR

I used to do compliance in wholesale, and the "notary fee" as a line item on the HUD was a frequent offender. The "notary fee" as a line item is an APR exclusion (specifically described in the TILA) - but any part of that fee that is a "service" fee is a finance charge and must be included in the APR. For that reason, the disclosed "notary fee" was (is) a favorite place to bulk up as a 'shell game' of shifting things in/out of the APR. (My job was to nail down a compliant APR, and disallow this - just for the record!)

Seeing an obviously bulked up "notary fee" - specifically named, as a single line item - is a violation of both the new CFPB guidelines AND the long-standing Reg Z/TILA. Still, there are plenty of people doing plenty of jobs in reality who don't fully understand what, exactly, they're doing (calculating the APR isn't exactly child's play) - or just accept things as disclosed as being compliant - but mostly IME, the players know exactly what they're doing and they do it because they seldom get caught.

Label it anything other than "notary fee" (i.e. Mary Smith NSA Svcs, or Notary Signing Svcs, or mobile notary svcs, etc) and the fee becomes an obvious APR fee - and somewhere, someone (+) has the job of making sure it is/was included.

Reply by Bear900/CA on 12/18/13 4:08pm
Msg #496523

That’s interesting. Thank you for the insight.

Did you also disallow ‘pads’? How could one determine they should be excluded from the finance charge? Because there is no entity to tie it to? Just curious.

Since the escrow officer generally makes up a bloated notary fee and pad to cover surprise expenses and then gives it to the LO or loan processor, I don’t think anyone 2nd guesses it. I’m not sure I know of anyone who understands it can become a finance charge for that matter.

“mostly IME, the players know exactly what they're doing and they do it because they seldom get caught.”

You really think so? I think it’s the blind leading the blind.

I’m also curious how it becomes a finance charge by adding a name (Bob Jones Notary Svc) verses an appraiser doing the same.

Marazz/AZ makes a good point about marked up appraisal fees from appraisal management companies. If the AMC is lender affiliated under the new QM, the fee will become part of their origination fee as would an affiliated escrow company fee. This is part of the 3% fee cap.

In any case the new disclosure for profit on notary fees will tip off the customer and perhaps regulate the title company.

Here’s a reference for anyone interested in following APR down the rabbit hole.

http://www.bankersonline.com/regs/12-1026/12-1026-004.html

Reply by ReneeK_MI on 12/18/13 4:44pm
Msg #496530

Ahh, APR talk, like 'sweet nothings' in my ear lol!

You asked "Did you also disallow ‘pads’? How could one determine they should be excluded from the finance charge? Because there is no entity to tie it to?"

Well, I'm in the MidWest (MI) and we fund at the table - i.e. we don't do 'pads' the way escrow states do. We close on a final HUD. Actually, I never had a lot of trouble sorting the APR fee from the non-APR fee - general rule of thumb (please read those 4 words again) is: if it's discretionary, it's APR. Much of the 'ease' was in being VERY familiar with the SOP of those Mid-West states I dealt with - what're the average items charged and what are the average fees for those items. Look at 100 HUDs a day and things that are not average just scream at you. 'Creative' charge items - wish I'd kept a list of the things folks dreamed up!

If you show a fee for "Susie Q Courier" and it's 5 x's the normal fee - show me Susie Q's invoice, or lower the fee to what's average.

You noted/asked: "“mostly IME, the players know exactly what they're doing and they do it because they seldom get caught.” You really think so? I think it’s the blind leading the blind."

When you're playing the Hud-back-and-forth game (I was wholesale, so there's a broker and a Title Agent in this game), and the APR is at its limit (or now, it changes) and you tell them - next you get a HUD with the same bottom line, but suddenly the "notary fee" has increased the same amount taken out of an APR fee. Yes, Bear - they know how to play this. Ok, they DID know how to play this - things have changed these past few years.

You said: "Since the escrow officer generally makes up a bloated notary fee and pad to cover surprise expenses and then gives it to the LO or loan processor, I don’t think anyone 2nd guesses it. I’m not sure I know of anyone who understands it can become a finance charge for that matter."

They will get a quick lesson with their first Fed audit. Again - familiarity with what's normal was key to my functioning. I knew what each MidWest state allowed for notary fees, I knew how many notarizations are in my loan pkg, I know what to expect for title's docs - if it should be ballparked at $60, and they show $150 - ixnay.

Now, it's certainly possible on our side of things, as NSAs, to see a HUD with a "notary fee" at $150 - and that HUD is NOT the one the Lender has approved (easy to do when the signature line is on a separate page). As long as the category totals are the same & the bottom line's the same - whose to know?

You asked" I’m also curious how it becomes a finance charge by adding a name (Bob Jones Notary Svc) verses an appraiser doing the same."

Note that I used names for "services" - I knew what mobile notaries do, what the average charge is, and I know that those charges include services (an APR fee). It's not changing because it's a named person, it's potentially changing because of the fee structure. If the state allows $2 for notarizations and Bob Jones Notary Services if charging $150 - this is the problem.

Fee shifting - not an exclusive talent.

=) that was fun, but only because I don't HAVE to know this crap anymore. =)

Reply by Bear900/CA on 12/18/13 6:02pm
Msg #496546

Re: APR talk, like 'sweet nothings' in my ear lol!

Haha¡K We can step it up to analyzing self-employed tax returns!

¡§things that are not average just scream at you.¡¨

Let's just leave identities unknown..

¡§=) that was fun, but only because I don't HAVE to know this crap anymore. =)¡¨

You know you do! Have a gander at the latest CFPB thinking regarding... APR/ TCR ?

¡§First, the Board and then the Bureau proposed to adopt a ¡§transaction coverage rate¡¨ for use as the metric to determine coverage of these regimes in place of the APR. The transaction coverage rate would have been calculated solely for coverage determination purposes and would not have been disclosed to consumers, who still would have received only a disclosure of the expanded APR.¡¨

The TCR had previously been proposed in conjunction with a more inclusive version of the APR, in order to avoid having the more inclusive, hence higher, APRs trigger certain requirements unnecessarily. The TCR includes fewer charges, and the Board's 2011 Escrows Proposal proposed to use it in the threshold test for determining application of those requirements. 76 FR 11598, 11626-11627 (Mar. 2, 2011).¡¨

Starting to feel sorry for people following this thread and promise to stop! ļ

Reply by Bear900/CA on 12/18/13 6:04pm
Msg #496547

Pardon the Greek! tossing keyboard out the window.. n/m

Reply by JanetK_CA on 12/19/13 1:18am
Msg #496583

Re: Ahh, APR talk, like

As with so many of your posts, Renee, this has been quite an education. Thanks for taking the time to spell this all out. I'm with you 100% with your last sentiment, except for the fact that I've never had to know this crap - and I'm happy to leave it up to others!

I AM glad, though, that there ARE others who still do understand - and, from time to time, audit - all this stuff.

Reply by JanetK_CA on 12/18/13 12:01am
Msg #496447

Hmm. I've always thought the opposite, and that they just used the term "notary" generically (vs. "signing agent" or whatever). Whenever I've been hired directly by the tc with my name listed on the HUD, the notary fee been shown as my full fee (including everything - printing, travel, etc.) without any correlation to the number of notarizations. Since we do more than just notarize, that has always seemed appropriate to me.

Reply by C. Rivera Chicago Notary Services on 12/18/13 8:22am
Msg #496467

OMG YES...I no longer work for a few huge TC's for this

very reason, and because I've called them out on it for trying to haggle my fee lower than $100 on any given closing.

Why should they be making MORE money off of my back!

I know one company in particular that is notorious for doing this, they are out of Texas. They will charge the borrowers up to $400, while they pay the nsa, if they're lucky, $125 for a refi for example. Disgusting!

Thanks for the info on fnf, interesting information.

Reply by Marazz/AZ on 12/18/13 10:59am
Msg #496484

Yes lenders are prohibited from up-charging on appraisal fees, but that hasn't really stopped them. The big ones just set up subsidiaries such as RELS and Landsafe to skim off part of the appraisal fee. Very similar to how signing services skim off part of the notary fee. They call it "management" and invent ways to justify their existence. As long as lenders or title companies (certainly big ones like Fidelity) can find a loophole, they'll take it and exploit it all the way to the bank.

While I don't want to squash any optimism that this ruling will be good for notaries, I'm not holding my breath either.