LEARNED SOMETHING TODAY

[Jaime Kosofsky]

I have been researching RESPA for about a month. I got into a discussion on Activerain about REO closings and I mentioned that the Seller can control the place of closing... I got a very persuasive response that it was in violation of RESPA. I contacted some of the leading RESPA attorneys in the country, and all three told me the same thing:

\THIS IS REALLY TECHNICAL STUFF... SEEK LOCAL COUNSEL BEFORE RELYING ON THIS!!!!!!!!

HUD takes the position that if a seller requires the buyer to use the seller's closing agent, and the closing agent selects the title provider, that is a violation of the Section 9 prohibition against a seller requiring the use of a particular title provider. Technically, a seller could require a buyer to use a non-affiliated closing agent, if the buyer could select the title provider. However, as a practical matter, if the provider selected often is the seller's preferred provider, HUD will assume that the buyer probably did not have free choice. In other words, the seller would have to demonstrate that the buyers did have free choice, even though many buyers picked the seller's preferred provider. RESPA does allow a seller to offer an incentive to a buyer to select a particular title provider. The incentive must be bona fide and not made up by higher costs elsewhere in the transaction.

IN the state of NC attorneys cannot collect title premiums in a transaction where they are the closing attorney, or rendered an opinion of title. SO... in North Carolina the seller can require the Buyer to close with the Sellers attorney, so long as Buyer is afforded the opportunity to have its own attorney review the documents, and so long as the buyer has the opportunity to choose its own title insurance company... At least until the law changes..