Scenario: A Loan Estimate has been issued. You're requiring lender's title insurance. During the title process, you are notified by the title company that a survey is required in order to issue title insurance. You did not disclose the requirement of a survey on the LE.

Question: 1) Does this require re-disclosure of the LE?; 2) Is this considered a changed circumstance?; 3) Should we consider always disclosing the requirement of a survey on the LE?

It's a changed circumstance. Issue a revised LE unless you are willing to eat the cost of the survey.

You only include a cost on the LE if you believe that the borrower will have to pay for it or is likely to have to pay for it. In the case of a survey for title purposes, I would only include it routinely if it's a normal requirement. When it's not required most of the time, leave it out unless the circumstances of a specific request indicate it's needed.

Completely agree w/ John and I'll add a hot spot that we've encountered. Be careful with survey's and Title Insurance. It's often required by the title co. to obtain an enhanced title policy; therefore, if you know an enhanced title policy will be required for your transaction/product but forgot to include the survey, it's not a changed circumstance.

Thanks!

To follow up with a question on this post. On our construction loans, the attorney may require a survey in order to issue a clean title. In the past, we always disclosed the Survey in the provider's list, but it was not subject to the tolerance. So it's not something that the creditor requires, but the attorney might. So a couple of questions:
1-Does the Survey fee have to be disclosed all the time because we think the attorney might require it? I read the posts above, but we really don't know. It's on a case by case situation when it's required.
2-Do we disclose the fee under section C or H? I thought it would be section H because it's not required by us, and we don't know if we'll need it.
3-If it goes under section H, does it require the word Optional? I would think not, because it's not an insurance, warranty, guarantee, or event-coverage product.
4-Does Survey have to be on the service provider list? It's not a required service by us, so I would assume not.

Some guidance from the pros would be appreciated. This guidance can be so unclear. Thank you.

Here's my thinking:

• At the time you issue the LE, you don't know whether a survey will be needed, so you don't include it on the LE
• If the attorney will require a survey in order to issue a clean title opinion, I have to assume that the bank will require the survey as a condition of moving forward with the loan. That would make it a changed circumstance, and you'd issue a revised LE with the survey included in Section B (if the attorney will order it) or C (if the borrower calls the tune on who is used)
• If you stick it in Section C, you will need to provide a supplemental or revised Provider List with at least one provider who is available to perform the survey. If you put it in section B, you won't have to do that.

The reason I believe you would require the survey is that you would not make the loan without a clean title opinion, and you won't get that if there is no survey.

Thanks John. That makes sense.

If survey was not previously disclosed on the LE because the title co thought they could use the old one; and now title company is requesting a new survey and we are now past the 3 days of knowing this but we did not re-disclose the LE for the COC....we now have a cure correct?

If you are outside of your three business day timeline for re-issue - yes.