On the closing disclosure, we do not require the owners policy for the borrower. The borrower chose to purchase the owners policy and chose one of the providers on our list. is this 10% or no tolerance?

10%

even if we do not require the owners policy?

Yikes! We always show the OTP as unlimited tolerance because we do not require its purchase....regardless of the provider. Citation for this?

that is what I understood also. if listed under "Optional" and not required by lender, we understood no tolerance at all. regardless if the provider for the owners policy was chosen from the list.

Joker's comment about 10% is only applicable if you REQUIRED owners title which would put it in Block B on the LE.

In newyork's first post it was stated the owners title is OPTIONAL which means you put it in Block H which is does not have a tolerance attached to it. Make sure you show it as: Title - Owners Title Policy (optional)

Whew!.....sigh of relief......

That is correct. We list the owners policy on letter H-OTHER and list is as optional. But our question was for the Closing Disclosure. The borrower did purchase one (we did not require it), and he purchased it from the title company we have on our list. Because he chose the title company on the list, does it fall under a tolerance?

No, because only those services that you require as a condition of the loan are subject to those limits. Refer to 1026.19(e)(3)(iii)(E).

Sorry...my eyes skipped over that. Keep in mind it IS subject to Good Faith in order to justify a change, however.

Yes, the Joker's correct.

We listened again to one of the FAQ's provided by FRB outlook live dated 8-26-2014 regarding owners policy and 10% and according the CFPB discussion, the owners policy is not subject to tolerance even if paid to an affiliate of the creditor because we do not require the owners policy as part of the loan. However, we are being told by our internal audits that is not correct. and they are citing us with this

From the Commentary to 12 CFR 1026.38
38(f)(3) Services borrower did shop for.
1. Provider on written list. Items that were disclosed pursuant to § 1026.37(f)(3) cannot be disclosed under § 1026.38(f)(3) when the consumer selected a provider contained on the written list provided under § 1026.19(e)(1)(vi)(C). Instead, such costs are disclosed pursuant to § 1026.38(f)(2).
1026.28(f)(2)
(2) Services borrower did not shop for. Under the subheading “Services Borrower Did Not Shop For” and in the applicable columns as described in paragraph (f) of this section, an itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer did not shop in accordance with § 1026.19(e)(1)(vi)(A) and that are provided by persons other than the creditor or mortgage broker, the name of the person ultimately receiving the payment for each such amount, and the total of all such itemized amounts that are designated borrower-paid at or before closing. Items that were disclosed pursuant to § 1026.37(f)(3) must be disclosed under this paragraph (f)(2) if the consumer was provided a written list of settlement service providers under § 1026.19(e)(1)(vi)(C) and the consumer selected a settlement service provider contained on that written list.

That would be interesting but for the fact that the optional owner's title policy is disclosed under (g)(4) -- in section H of the Loan Estimate, and not under (f)(3). Anything disclosed under 1026.37(f)(3) would be a REQUIRED service for which the owner is able to shop. The auditing department is looking for General Tso's chicken in an Italian restaurant.

Your auditors are not reading the full content of the regulation. Additionally, they may be reading too much in to the Good Faith portion of the requirements that even affect non-tolerance items.

Wish there were a "like" button on here sometimes. That is classic.

Thanks, Luv2Run. I was looking forward to take-out supper from the DragonLite restaurant in Hyannis when I wrote that. (It was really good!)

I'm getting conflicting answers from the Title Company and Compliance One. Would someone please define what real property is (in the TRID frame of mind)? Title company says it is real estate with structure. Compliance one says it is dirt, whether a structure or not. Me, I'm down to my last three finger nails.

The regulation refers to real property (dirt), not residential real property.

Thanks, Dan

What Section of the Loan Estimate should OTP be disclosed in and what is the tolerance category if a consumer selects from the list of providers?

•Owner’s Title Policy is considered an optional fee; therefore, disclosed in Section H under “Other Fees”. However, if selected from the list, though optional the OTP will still be subject to the 10%.

•§1026.37(g)(4)-Commentary-1. Owner’s title insurance policy rate. The amount disclosed for an owner’s title insurance premium pursuant to § 1026.37(g)(4) is based on a basic owner’s policy rate, and not on an “enhanced” title insurance policy premium, except that the creditor may instead disclose the premium for an “enhanced” policy when the “enhanced” title insurance policy is required by the real estate sales contract, if such requirement is known to the creditor when issuing the Loan Estimate. This amount should be disclosed as “Title – Owner’s Title Policy (optional),” or in any similar manner that includes the introductory description “Title –” at the beginning of the label for the item, the parenthetical description “(optional)” at the end of the label, and clearly indicates the amount of the premium disclosed pursuant to § 1026.37(g)(4) is for the owner’s title insurance coverage. See comment 37(f)(2)-4 for a discussion of the disclosure of the premium for lender’s title insurance coverage.

anyone familiar with this post from PPDOCS?

As far as the Lender's/Owner's/Simultaneous title ins fee calculation. We do the calculation for the fees on the LE for the company we disclose.

On the CD, do we do the calculation but for the title company that was used and their fees? Then give a credit to the Seller for the difference between the Lender's and Owner's true fees since the Seller is paying for the Owner's?

Citation?

newyork, I have OTI as optional and no tolerance issue regardless.

ETA: So long as quoted in good faith.