Buying a home involves coordinating various professionals who provide “settlement services,” such as appraisers, title companies, attorneys, and inspectors. A Settlement Service Provider List (SSPL) from your lender serves as a recommended directory of these service providers to assist you during the closing process.
Legal Requirement Under RESPA
The Real Estate Settlement Procedures Act (RESPA) mandates that lenders give you this list along with your Loan Estimate within three business days of your mortgage application. RESPA aims to protect consumers by increasing transparency and preventing lenders from steering borrowers exclusively to affiliated providers for hidden kickbacks. This list lets you know you have the right to choose your own providers for many of the services involved, promoting competition and potential savings.
What Services Are Included?
Your SSPL categorizes services you might need during closing. Some services are selected by the lender and cannot be changed, but many others can be shopped for:
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Services Typically Not Eligible for Shopping:
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Appraisal: Ordered by lender to assess home value (learn more about Appraisals).
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Credit Report: Pulled by lender to check your credit (see details on credit report processes).
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Services You Can Shop For:
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Title Services: Includes title search, title insurance, and settlement agent fees. You can pick your own title company to potentially save money. More on Title Insurance.
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Pest Inspection: Checking for insect damage, which you can arrange independently.
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Property Survey: To confirm legal boundaries, which you may have done by your choice of surveyor.
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Attorney Services: Required in some states for closing, and you can select your own real estate attorney.
Your Rights and Tips
You are not obligated to use providers listed on the SSPL for the services you can shop for. It pays to get multiple quotes to ensure fair pricing. If your lender recommends providers they have an ownership interest in, they must disclose that under RESPA rules.
Avoid Common Pitfalls
- Don’t assume you must use the lender’s recommended providers.
- Take time to compare service fees properly to avoid unexpected costs.
- Ensure you’re comparing equivalent services, especially for title insurance or inspections.
FAQs
Will my closing be delayed if I choose my own provider?
If the provider is reputable and you notify your lender promptly, selecting your own provider typically does not delay closing.
How do I find reliable providers?
Your real estate agent and online reviews are good starting points. Ask friends or family for recommendations too.
For more detailed guidance on your closing costs and loan disclosures, see our articles on Estimated Closing Costs and Loan Closing Checklist.
Sources:
- Consumer Financial Protection Bureau, TRID Rule and Settlement Service Provider List
- Investopedia, Real Estate Settlement Procedures Act (RESPA)
