Seller Requesting FICO Scores, ETC.
Seller Requesting FICO Scores, Etc.?
QUESTION: I represent a buyer who is interested in a particular property in the MLS. In the REALTOR Notes for that listing, it states, “All offers require a pre-qualification letter, FICO scores, copy of earnest money and must use closing company of seller’s choice.” Is it legal/ethical to ask for FICO scores and also to demand that the buyer use the seller’s choice for a closing company?
ANSWER: The only thing we have concerns about is the dictation of who orders the title insurance (and from whom), and the closing company. Both parties are permitted to have their own closing representation, but they may have to pay for it. Under RESPA, if the buyer is paying for the title insurance, then they have the right to select its provider. However, if the seller is paying for the title insurance then it can be negotiated. Look first to the contract to determine if it indicates from which agency the title insurance will be purchased.
Another thing to keep in mind is who is issuing the policy. Often, the lender will dictate who is to issue the lender’s policy. However, if that title company is going to charge a high rate for the owner’s policy, then see if the two title companies will agree to have one company issue the policies and then split the premiums. If not, then you can indicate that the seller will bring their own owner’s policy. Often this will encourage cooperation so as to avoid paying the higher rates for the lender’s policy. Please keep in mind that this would only apply if the property were residential.
Although we do not know of anything which would prohibit requesting the FICO scores, we would hesitate to recommend it from a liability standpoint. By receiving the information which often accompanies the FICO score (such as Social Security number, account numbers, etc.), the agents involved could be opening themselves up to liability and taking on a great responsibility for safekeeping that information. We would not recommend assuming this added responsibility!
[SOURCE: TAR's Legal & Ethics Hot Line Attorneys]
