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#2268547 - 04/01/22 02:05 PM Owners Title Insurance
ckme Offline
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ckme
Joined: Sep 2002
Posts: 248
We omitted showing owner's title insurance on the LE for a land purchase and we do not require it. We issued the CD without it, but after talking to the closing agent, the borrower is electing to purchase the owner's title insurance.

1. How do we correct? Can we just do a revised CD with the premium and still close on Monday?
2. Is the owner's title insurance premium exempt from tolerance?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2268550 - 04/01/22 02:21 PM Re: Owners Title Insurance ckme
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,323
Galveston, TX
Do you live in jurisdiction where it is uncommon for a purchaser to buy an owner's title policy at the time of purchasing a new property? I am not aware of any jurisdiction where that is the case.
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#2268552 - 04/01/22 02:30 PM Re: Owners Title Insurance ckme
ckme Offline
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ckme
Joined: Sep 2002
Posts: 248
it is optional for the borrower, and the vast majority do not purchase it. This was an error on the LE by a processor that was not identified until this borrower asked to purchase it. The processor thought the owners title insurance did not have to go on land purchases.

We normally disclose it as optional on all purchases. The borrower makes the decision on whether or not purchase. So now we are trying to get this loan correct so we can close.

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#2268561 - 04/01/22 03:21 PM Re: Owners Title Insurance ckme
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,323
Galveston, TX
A charge for a non-required service that is normally subject to no tolerance, if it was not disclosed in good faith on the Loan Estimate, becomes a 0% tolerance item.

Official Interpretation
19(e)(3)(iii) Variations permitted for certain charges.

3. Good faith requirement for property taxes or non-required services chosen by the consumer. Differences between the amounts of estimated charges for property taxes or services not required by the creditor disclosed under § 1026.19(e)(1)(i) and the amounts of such charges paid by or imposed on the consumer do not constitute a lack of good faith, so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the consumer informs the creditor that the consumer will obtain a type of inspection not required by the creditor, the creditor must include the charge for that item in the disclosures provided under § 1026.19(e)(1)(i), but the actual amount of the inspection fee need not be compared to the original estimate for the inspection fee to perform the good faith analysis required by § 1026.19(e)(3)(iii). The original estimated charge, or lack of an estimated charge for a particular service, complies with § 1026.19(e)(3)(iii) if it is made based on the best information reasonably available to the creditor at the time that the estimate was provided. But, for example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer's attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor's failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii). Similarly, the amount disclosed for property taxes must be based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the creditor fails to include a charge for property taxes, or includes an unreasonably low estimate for that charge, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor's failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii) and the charge for property tax would be subject to the good faith determination under § 1026.19(e)(3)(i).
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#2268669 - 04/05/22 01:33 PM Re: Owners Title Insurance ckme
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,858
Cape Cod
Originally Posted by ckme
This was an error on the LE by a processor that was not identified until this borrower asked to purchase it. The processor thought the owners title insurance did not have to go on land purchases.

We normally disclose it as optional on all purchases.

That statement in your post above, plus the key sentence in the middle of the comment Randy Carey cited — "But, for example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer's attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor's failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii)" — kill any chance that you'll be able to avoid paying for that title insurance coverage premium for the borrower.
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John S. Burnett
BankersOnline.com
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