The owner's title insurance premium( OTP), the lender's title insurance premium (MTP) and the simultaneous purchase discount are shown below:

OTP - $2,507.00
MTP - $2,424.00
Sim. Disc. - $100

This is disclosed on the LE as follows:

Lender's Title Insurance: $2,424.00
Owner's Title Insurance (Optional): $183.00

Question, if the borrower surrender's the owner's title insurance that he originally purchased for the lot, he'll receive a credit of $593 towards the new title policies purchased (really, the new owner's policy)....how do we disclose the credit on the Closing Disclosure? Is the credit reflected as a reduction of the Lender's Title Insurance amount? A reduction of the Owner's Title Insurance amount making it a negative amount (-$410) or as an adjustment?

Thanks in advance for any feedback!

I would disclose the $593 as paid by a third party reducing the lender's title amount.

That would work for me, too. Show the LTI policy with $1831 in the Borrower Paid column and $593 in the Paid by Others column.

That works for me as well...thanks for the responses gents and thanks for all the help and feedback here with TRID and the other regs...it's greatly appreciated and has been extremely helpful!

Did you have any trouble with your system calculating this credit correctly when you did it this way (we use LaserPro)? Logically it should work fine, but staff is telling me otherwise, so instead, they are wanting to show just a negative number in section H for the owner's title policy amount, but I don't think that is correct. I'm still waiting for the copy of the closing disclosure from the processor to know for sure.

CFPB seminar from May 26 2015:

Turning back to the question posed concerning how the creditor showed the allocation of costs when the seller has agreed to pay for the owner's title insurance cost as part of the purchase and sale contract with the consumer.

Because the final rule provides that the incremental cost of the owner's title insurance is to be disclosed on the Loan Estimate and the Closing Disclosure, simply shifting the incremental cost of the owner's title insurance to the seller on the Closing Disclosure may not completely reflect the amount that the seller has agreed to pay for the owner's title policy.

If there is an additional amount from the seller's credit, there are at least three ways in which the additional credit between the seller and consumer may be disclosed on the Closing Disclosure.

First, the remaining credit could be applied towards any other title insurance costs including the lender's title insurance cost. See Section 1026.38(f) and (g).

Second, the remaining credit can be considered to be a general seller credit and disclosed as such in the Summaries of Transactions table on page 3 of the Closing Disclosure. See Section 1026.38(k)(2)(vii).

Third, some in industry have suggested providing a credit specifying the remaining amount for the owner's title insurance cost, again in the Summaries of Transactions on page 3 of the Closing Disclosure. See Section 1026.38(k)(2)(viii).

Any one of these three methods to disclose the remaining amount of seller's credit for an owner's title policy is permissible under the final rule.

When we did it as suggested above, it's showing the borrower still having to bring too much to closing (by the discounted amount). So, what we are doing is charging for the full LTI policy in B. Then in H, we are taking the full OTI policy amount minus the credit plus the Sim Discount which is making this negative number.

LTI Policy: $2,515 (section B)

Full OTI Policy = $2,814
Less full LTIP of $2,515
Plus Sim Dis of $100
Less credit from previous policy: $709
Equals amount in Section H for "Title - Owner's Title Insurance (optional" = -$310

Is the "real" premium amount for the LTI reduced to just $100 when it's issued simultaneously with OTI policy?

I'd move that credit from the previous policy to page 3 as an "Other Credit" in section L of the CloD. Theoretically, it should not matter whether you credit it there or in Section H as you have done it. It should still result in the correct cash to close number. And it gets rid of a negative number in a section that normally includes only positive numbers.

HUD used to get real picky about where you put stuff on the HUD1. We don't know yet whether the Bureau will pick those same nits.

That's a great suggestion, too, John! Thank you!