I have read several threads from 2015 to current and I'm still not sure which is correct.

In our jurisdiction the seller pays for owners title insurance however we have disclosing it under Section 8 as optional. By doing this, since this is an optional charge, do we have to include it in the amount of our Lender's Credit for the no cost loan? If we do then our credit is always going to be $200-$600 more than what the borrower will actually be paying in costs.

My questions are:

1. Do we have to include the cost in the Lender's Credit or may that cost be excluded?
2.Since we know the borrower will not be responsible for the OTI premium can we just omit from the LE under the "seller paid options" in TRID 2.0, and if by some off chance we get a Purchase Agreement where the buyer is to pay the premium issue a revised LE based on the new known facts (changed circumstance) to include the premium and increase our credit?

Thank you.

however we have disclosing it under Section 8 as optional

That should read, "we have been disclosing it under Section H as optional"

why would you ever show a seller paid item as part of a lender credit?
In my state, the seller pays for OTI. We just put it in H as optional and that's all.

99.9% of the time in our area the seller pays for the OTI.

What we do is:

Disclose the OTI in H as an optional charge but we do not include it in our Lender Credit unless we have the Purchase Agreement prior to issuing the initial LE and it is one of those .01% times the buyer agreed to pay the OTI. In that case we include the charge in the Lender Credit.

If we receive the Purchase Agreement after issuing the initial LE and it calls for the buyer to pay the OTI we do not issue a revised LE but we include the charge on CD and increase our lender credit to cover the additional charge.

Just a side note. This is something we just recently started doing. Prior to that we weren't disclosing any costs the bank was paying on the LE for a no cost loan but due to a recent thread we changed our procedures.