Vendors Seen Guaranteeing Settlement Prices

Some vendors are making it easier for lenders to complete the new good faith estimate disclosure by providing price guarantees, according to a Real Estate Settlement Procedures Act attorney. "We are seeing a lot of vendors guaranteeing the [settlement] charges. And I expect to see more of that," said Phillip Schulman, a partner at K&L Gates in Washington. Lenders also want third-party vendors that they recommend to homebuyers not to raise prices without providing 60-day advance notice, Mr. Schulman told clients during a webinar. Under the new RESPA rule, charges for lender-required or lender-recommended services should not exceed the initial estimate given to mortgage applicants by more than 10% at closing. If the settlement costs are higher than the good faith estimate, the lender ends up paying the difference at the closing table. In guaranteeing prices, vendors are expected to pay the overage, Mr. Schulman said.