Closing Cost Questions

[Art Maydan]

I’m looking at my closing disclosure and the underwriting fee is $995 while fees going to the title company are $3,008 and it’s under “Services Borrower Did Shop For”. I was told by the seller which title company we’re using, so I did not shop for these. And I have trouble believing the lender does everything they do for under $1,000 while the title company makes $3K for facilitating closing and doing a title search (please tell me if there’s more they do). Does the title company and lender split that $3K somehow? If not, why is this under “Services Borrower Did Shop For”?

Also, the CD shows that I’m paying for every single closing cost, even tax stamps. In the broker exam study material I’m reading, I read that the seller customarily pays for this. There’s a seller credit for $2,730, but this was negotiated by me. Well, sort of. I bought this duplex without a broker off the market from a rehabber and I had never even negotiated for a car before.

I said $250 and he said $270 (I was willing to go to $310 and it’s a great deal at $270. This guy doesn’t know the area that well). I said $270 and you pay closing costs. He agreed to that and I was happy. That was the extent of our negotiations. When lawyers got involved, they asked for an exact amount and the seller’s lawyer came back with this figure. I didn’t argue because we’ve been trying to buy this house for 6 months and have had tons of setbacks and I didn’t want to rock the boat. Anyway, is me paying all these closing costs right? I’m enormously displeased with both my lawyer and lender, so I wouldn’t be at all surprised if there are mistakes in these documents.

[Chris Mason]

Hi @Art Maydan,

What you said and what the other party said is irrelevant. We can't send verbal agreements to underwriting. What is written in the ratified contract is what is relevant. That's what we use, and what the settlement service providers (eg, title/escrow) use.

When we don't pick the settlement service provider(s), it goes under "did shop for" because the government says so. In this case, your "shopping" consisted of negotiations with the seller, who during the course of negotiations selected who would provide these services.

At the end of the day, the seller had professional representation (a lawyer or agent) and you did not. This is what that looks like.

If title/escrow don't disburse the funds exactly as described in the settlement paperwork, that's millions of dollars in fines. Similarly if the lender accepts some sort of kickback, millions of dollars in fines. The books of settlement service providers and mortgage lenders are subject to audit, search, and seizure, without probable cause or a warrant. And we are, in fact, audited periodically.