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#2021648 - 06/19/15 07:30 PM Re: Owner's Title Insurance terpsfan
RR Joker Offline
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Thanks y'all.
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TRID - TILA/RESPA Integrated Disclosures Rule
#2021740 - 06/21/15 03:41 AM Re: Owner's Title Insurance terpsfan
Truffle Royale Offline

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Thanks from me too. I think I'm finally starting to get it. Now with the likely delay, I'll have time to reread this a few mores times to make sure I do!

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#2079521 - 05/19/16 10:49 PM Re: Owner's Title Insurance terpsfan
ILMF2016 Offline
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We are currently offering a "no cost" purchase mortgage loan where all the fees including the owner's policy and lender policy are "paid by lender." My issue is on "no cost" loans if we disclose the full owner's title policy and do the "magical math" then we are over quoting our lender credit for owner title policy which we can't reduce. If we try and adjust in the other section as a credit then the CD shows a credit to the consumer.

Our title company said to just disclose the simultaneous rate since it was a lender credit that paid for it. Can you help determine if it would be okay to only disclose the simultaneous rate for "no cost" purchase mortgage loans?

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#2079784 - 05/23/16 01:28 PM Re: Owner's Title Insurance terpsfan
John Burnett Offline
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I don't understand how you'd end up with a credit to the consumer.

If you disclose the full LTI premium on the LE and offset it with a Lender Credit, you'd do the same on the CloD. Using fabricated amounts, if the full LTI is $1,000, discounted LTI is $100, and full OTI is $950, the LE would show the LTI as $1,000 and a Lender Credit of $1,000. On the CloD, you'd show (using "magical math") an LTI of $1,000, and an OTI of $50, both in the Paid by Others (L) column. So your lender credits on the CloD are $1,050, an increase of $50 over the credit shown on the LE. What's the problem? On both the LE and CloD, the consumer nets out at $0 for these costs.
Last edited by John Burnett; 05/23/16 01:30 PM.
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#2081879 - 06/03/16 11:03 PM Re: Owner's Title Insurance terpsfan
ILMF2016 Offline
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Thank you John for your response on the "no cost" loan question.

1. If we get an application for a purchase (no contract yet) and we issue the LE with the full LTI and it's customary for sellers to pay for the OTI, how do we do the "magical math" for the OTI on the LE when we don't know who the closing settlement agent and rates vary? Do we need to disclose the OTI on the LE if we don't have the OTI premium?

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#2081906 - 06/06/16 12:19 PM Re: Owner's Title Insurance terpsfan
John Burnett Offline
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Based on the information you have under such circumstances, you could omit the OTI because it is optional and because it's not a cost the seller will pay if it is purchased.

However, if it's the norm in transactions with a seller that OTI is purchased and paid for by the seller, omitting OTI from the LE will typically overstate the cash needed for closing. Many lenders will list the OTI in Section H of the LE, labeling it as "(Optional)," and list the seller's anticipated payment for the full OTI premium on the seller credits line of the Calculating Cash to Close table. Best available estimates of those costs are used.

Because OTI is optional (not required by the lender), its cost is not subject to tolerance limits under section 1026.19(e)(3).
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#2081991 - 06/06/16 04:54 PM Re: Owner's Title Insurance terpsfan
ILMF2016 Offline
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Thank again John!

One final question, if we disclosed the discounted simultaneous rate on the Lender's Title Policy instead of the Owners Title Policy and the loans have already closed. Do we need to issue a revised CD showing the discount under the OTP and disclosing the full LTP?

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#2082085 - 06/06/16 09:46 PM Re: Owner's Title Insurance John Burnett
ILMF2016 Offline
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Hi John,

I went to plug in the LTI as $1000 a Lender Credit of $1000 on the LE. Then on the CD I plugged in LTI $1000 as a lender credit and the OTI of $50 in the Paid by Others (L) column. When I go to fund the loan from the CD my lender credits still shows $1000 for LTI but I only need to pay the title company a $100 for the discounted LTI. How do I fund the loan without decreasing my lender credits which is a violation?

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#2082118 - 06/07/16 12:57 PM Re: Owner's Title Insurance ILMF2016
John Burnett Offline
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Originally Posted By ILMF2016
Thank again John!

One final question, if we disclosed the discounted simultaneous rate on the Lender's Title Policy instead of the Owners Title Policy and the loans have already closed. Do we need to issue a revised CD showing the discount under the OTP and disclosing the full LTP?


Although you have a violation because you didn't disclose in accordance with the Bureau's prescribed method, you are REQUIRED to issue a corrective CD, because the net amount actually paid by the borrower isn't changed.
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#2082121 - 06/07/16 01:04 PM Re: Owner's Title Insurance ILMF2016
John Burnett Offline
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Originally Posted By ILMF2016
Hi John,

I went to plug in the LTI as $1000 a Lender Credit of $1000 on the LE. Then on the CD I plugged in LTI $1000 as a lender credit and the OTI of $50 in the Paid by Others (L) column. When I go to fund the loan from the CD my lender credits still shows $1000 for LTI but I only need to pay the title company a $100 for the discounted LTI. How do I fund the loan without decreasing my lender credits which is a violation?


The lender credits on the CD consist of any amount listed as a lender credit in Section J, plus any amount paid by the lender in the Paid By Others column on page 2. There should be nothing in Section J for lender credits related to title insurance on the CD. The $1,000 LTI cost and the discounted OTI cost of $50 go in the Paid by Others column on page 2. There's no violation because Lender Credits on the CD are $50 MORE than the lender credit of $1,000 on the LE.
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#2141407 - 08/09/17 05:45 PM Re: Owner's Title Insurance RR Joker
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Two (related) questions, please:

1. If the owner's title policy is optional, then is this fee always subject to an unlimited tolerance, including if/when a consumer selects a provider off of our preferred provider list?

2. Is it only when the owner's title policy is mandatory and a consumer could shop but selects a provider off of our preferred provider list that the fee is subject to the 10% tolerance?

Thanks.
Last edited by ComplyCycle; 08/09/17 05:48 PM.
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#2141408 - 08/09/17 06:01 PM Re: Owner's Title Insurance terpsfan
rlcarey Offline
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1. Yes
2. How or why would anyone force an owner to buy title insurance??
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#2141413 - 08/09/17 06:40 PM Re: Owner's Title Insurance rlcarey
ComplyCycle Offline
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Thanks for the quick response. Based upon what you've stated (which is obvious in hindsight), the owner's title policy will always be subject to an unlimited tolerance and never a 10% tolerance, correct? I appreciate the assistance.

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#2141534 - 08/10/17 03:11 PM Re: Owner's Title Insurance terpsfan
John Burnett Offline
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Correct.
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#2151286 - 10/26/17 05:09 PM Re: Owner's Title Insurance terpsfan
Nico Offline
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I am in a state where it is customary for the seller to pay the OTI and where most sales contracts specify that the seller is to pay the OTI. We do not, of course, require the OTI.
If we did not disclose the OTI on the Loan Estimate, even though we had a sales contract stating the seller is paying for it, how do we cure this? There is no associated tolerance cure when it is optional; therefore, our QC department is stating this is an incurable violation.

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#2151291 - 10/26/17 05:52 PM Re: Owner's Title Insurance terpsfan
RR Joker Offline
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4) Other. Under the subheading “Other,” an itemization of any other amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay at closing and of which the creditor is aware at the time of issuing the Loan Estimate, a descriptive label of each such amount, and the subtotal of all such amounts.
(i) For any item that is a component of title insurance, the introductory description “Title –” shall appear at the beginning of the label for that item.
(ii) The parenthetical description “(optional)” shall appear at the end of the label for items disclosing any premiums paid for separate insurance, warranty, guarantee, or event-coverage products.

You can't cure it. You can train so that it doesn't continue happening. Your QC department is correct.


I think I'm thinking about some exception regarding simultaneous issue discount states...let me retract this. We always disclose it and I've never actually had a seller pay it...so I am likely mixing something up on this and will leave it to those who do live in the 'seller-paid' world. crazy
Last edited by RR Joker; 10/26/17 06:51 PM.
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#2151298 - 10/26/17 06:18 PM Re: Owner's Title Insurance terpsfan
rlcarey Offline
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If you have a contract that says the seller is paying for it, it doesn't belong on the LE as a borrower cost.

What am I missing?
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#2151309 - 10/26/17 07:30 PM Re: Owner's Title Insurance terpsfan
Nico Offline
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Do you not construe the above phrase "or has contracted with a person other than the creditor or loan originator to pay at closing" to reference optional fees paid by the seller?
It could be read two ways - items they have contracted to be paid BY an entity other than the creditor or items they have contracted to be paid TO an entity other than the creditor.

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#2151320 - 10/26/17 07:44 PM Re: Owner's Title Insurance terpsfan
raitchjay Offline
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I think it has to be the latter.....why would you be putting fees on the LE that the borrower isn't going to have to pay? If you're putting OTI that the contract or state law says the seller has to pay, why are you stopping at OTI? Why wouldn't you also put doc stamps or any other seller fee you could think of on the LE?

Not trying to be flip.....i'm just confused now by reading the last few posts in this thread.
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#2151325 - 10/26/17 07:57 PM Re: Owner's Title Insurance terpsfan
rlcarey Offline
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why are you stopping at OTI? Why wouldn't you also put doc stamps or any other seller fee you could think of on the LE?

Well, one reason is that the TRID amendments clarified that any seller paid fees can either be shown and offset with a seller credit or omitted totally from the LE.
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#2151329 - 10/26/17 07:59 PM Re: Owner's Title Insurance terpsfan
raitchjay Offline
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OK
Randy......i'm in the "omitted totally from LE" camp....i don't show any seller fees on the LE, OTI included if the contract states that the seller will pay. Is that not correct?
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#2151331 - 10/26/17 08:02 PM Re: Owner's Title Insurance terpsfan
raitchjay Offline
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OK
Now if the contract states that our borrower will pay what are typically seller fees, then yes, those get included on the LE.
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#2151333 - 10/26/17 08:06 PM Re: Owner's Title Insurance terpsfan
Nico Offline
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I agree with you - now to convince my QC department! Thanks for all your help!

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#2151374 - 10/27/17 12:51 PM Re: Owner's Title Insurance terpsfan
RR Joker Offline
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I did find the snippet I was referring to in another thread, as this one re-kindled my interest and made me wonder where my initial thought really came from [again, not an issue for me. Hardly anyone around here buys it and if they do the borrower pays for it]

If the seller is responsible for specific settlement service costs, those service should not appear on the loan estimate (except for a commitment to pay for owner title insurance in a jurisdiction where there is a simultaneous-issue discount on the lender TI policy).
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#2151384 - 10/27/17 01:01 PM Re: Owner's Title Insurance terpsfan
rlcarey Offline
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Joker - not sure I understand this statement:

(except for a commitment to pay for owner title insurance in a jurisdiction where there is a simultaneous-issue discount on the lender TI policy).

The seller's credit for the difference would still be shown on the LE for the calculated difference, but it still would not require that the OTI be disclosed as a borrower cost in Section H.
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