Owner's Title Insurance

Posted By: terpsfan

Owner's Title Insurance - 05/21/15 12:46 PM

Is owner's title insurance required to be disclosed on refinances since it is available?
Posted By: JWills, CRCM

Re: Owner's Title Insurance - 05/21/15 02:29 PM

It is not needed for refinance transactions.
Posted By: rlcarey

Re: Owner's Title Insurance - 05/22/15 02:04 AM

Well, that depends. In the States where it is possible for a borrower to purchase title insurance after they purchase the property and the lender is in possession of knowledge that the borrower will be purchasing title insurance, you would be required to include it in the LE. But without that knowledge, JWills is correct.
Posted By: terpsfan

Re: Owner's Title Insurance - 05/22/15 03:54 PM

The current rule requires it on purchase transactions regardless of whether the consumer will be purchasing it but I don't see in the new rule that it is required on all purchases. I am assuming that they want you to quote it regardless on purchases but I can not find a reference to it.
Posted By: JWills, CRCM

Re: Owner's Title Insurance - 05/22/15 04:12 PM

We are assuming that as well terpsfan, I could not find a specific reference to it either.
Posted By: Dan Persfull

Re: Owner's Title Insurance - 05/22/15 04:39 PM

This is my take on OTI (although not set in stone just yet).

Regulation Z – 1026.37(g) (4)

(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.

From the Commentary to .37(g) (4)

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.

The statement that the consumer is likely to pay is IMO the catch all phrase to include OTI on the LE for purchase transactions. Because OTI is available for purchase transactions then the consumer is likely to pay, or contract to have the OTI paid for on their behalf.

In other words in a purchase transaction;
• we are aware that OTI is available and we know the consumer is likely to pay for it,
• or they are likely to contract for the seller to pay for it,
• or we have a copy of the purchase agreement that may or may not state how OTI will be purchased if at all.

Because of this “local” knowledge this section of Regulation Z does not IMO give or allow an exemption for not disclosing the OTI in a purchase transaction.
Posted By: John Burnett

Re: Owner's Title Insurance - 05/22/15 05:46 PM

Further in support of this idea is found back in 1026.19, specifically comment 19(e)(3)(iii)-3 (I finally found a comment that is easy to remember how to cite) where it discusses the fact that if the property is 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 pursuant to § 1026.19(e)(1)(i), then the creditor's failure to disclose, or under-estimation, does not comply with § 1026.19(e)(3)(iii)."

It's a different fee, but the concept is the same, I think.
Posted By: rlcarey

Re: Owner's Title Insurance - 05/22/15 10:19 PM

If you need any additional support - read the preamble to the regulation:

Based on these comments, in particular the comment by the State trade association
suggesting that owner’s title insurance be disclosed when required by the creditor, the Bureau
considered removing any requirement to disclose a non-required owner’s title insurance
premium on the Loan Estimate for purchase transactions rather than merely revising the
proposed notation associated with the owner’s title insurance premium. This, however, would
remove a sizeable cost from the Loan Estimate that a consumer may be likely to pay and thereby
reduce the accuracy of the Loan Estimate. Additionally, if not disclosed on the Loan Estimate,
the cost of an owner’s title insurance policy would not be subject to any tolerance level under
§ 1026.19(e)(3), making the consumer protections related to the tolerance levels in applicable to
a charge that frequently is a large dollar amount. Accordingly, the Bureau concludes that the
owner’s title insurance premium should be disclosed on the Loan Estimate in a purchase
transaction if a consumer is likely to pay for it, regardless of whether the policy is required by
the creditor.
Posted By: RR Joker

Re: Owner's Title Insurance - 05/26/15 05:58 PM

Lovely. I really wish that one would go away unless you are aware of its anticipated purchase. I think I may have had 2 closings last year where they got it...both were on foreclosed properties, so very understandable (IMHO).
Posted By: AF_23

Re: Owner's Title Insurance - 06/04/15 05:15 PM

RR, I wish the same as you on owner's title insurance. It's usually not purchased on our loans, but we have to throw that estimate out there anyway. We generally finance all fees but will consider the owner's title insurance to be paid in cash, so it doesn't affect our numbers. I was hoping the integrated disclosure rule would allow us not to have to worry with this requirement, but oh well, we'll continue to disclose a cost to the borrower that will end up being taken off when we do the Closing Disclosure.
Posted By: Minion

Re: Owner's Title Insurance - 06/18/15 01:53 PM

Ok I am still trying to figure out, what Tolerance bucket exactly does Owner's Title Insurance fall under?
Posted By: RR Joker

Re: Owner's Title Insurance - 06/18/15 01:56 PM

If you allow shopping and they choose from your list, 10%. If they go off list there is not tolerance issue.

ETA: If you require a specific provider, 10%
Posted By: Rdy2Retire

Re: Owner's Title Insurance - 06/18/15 02:28 PM

If purchase of Owners Title Insurance is "optional", then there is no tolerance to abide by, correct?
Posted By: RR Joker

Re: Owner's Title Insurance - 06/18/15 03:39 PM

right
Posted By: #Just Jay

Re: Owner's Title Insurance - 06/18/15 03:44 PM

As long as they do not purchase it.
Posted By: TMatt87

Re: Owner's Title Insurance - 06/18/15 03:45 PM

I attended a webinar yesterday that said in states where OTI is customarily paid by the seller, it isn't required to be shown on the LE. They didn't offer a citation.

In my state, the seller pays the OTI, so do we have to disclose on the LE?
Posted By: RR Joker

Re: Owner's Title Insurance - 06/18/15 03:45 PM

JJ, if it's optional, it shouldn't carry any tolerance concerns even if they do purchase it. We just have to show our due diligence on 'good faith' with the estimate.
Posted By: John Burnett

Re: Owner's Title Insurance - 06/18/15 05:56 PM

Originally Posted By TMatt87
I attended a webinar yesterday that said in states where OTI is customarily paid by the seller, it isn't required to be shown on the LE. They didn't offer a citation.

In my state, the seller pays the OTI, so do we have to disclose on the LE?


The Loan Estimate only includes costs that will be paid by (or you believe are likely to be paid by) the consumer/borrower. You include the OTI in Section H if it is optional and you believe the borrower is likely to pay for it. If you know (Purchase agreement, statement of borrower, local custom, whatever credible source) that the borrower isn't paying for it, you don't include it on the LE.

But if it is obtained, it goes on the CloD, with the amount(s) in the appropriate (borrower/seller/other) column(s).
Posted By: taylor<3

Re: Owner's Title Insurance - 06/19/15 04:22 PM

So John, you are saying that if it is local custom (it is specified on the sales contract, & 90% of the time the seller pays the OTI) then we do NOT have to disclose it on the LE?
In Texas, there is a simultaneous issue discount for LTI also. So if we do not disclose the OTI, would we disclose the LTI at the full premium, or with the simultaneous issue discount?
Sorry, this is the first I've heard of not disclosing OTI, & assumed we would have to since we do on the current GFE, even if it is known the seller will pay.
Posted By: RR Joker

Re: Owner's Title Insurance - 06/19/15 05:34 PM

I would like to further clarify your above statement as well, John. Typically (99%) borrower's here do not purchase OTI. When you state 'if you know....that the borrower isn't paying for it, don't include it....

Does that apply if a borrower would typically pay for it, but says that are not getting it, or only if you know someone else will be paying it?
Posted By: John Burnett

Re: Owner's Title Insurance - 06/19/15 06:17 PM

Taylor <3 -- The key regulatory language addressing your question is in 1026.37(g)(4):
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,... (emphasis added)

The Loan Estimate is all about your estimate for the consumer of what his/her costs for the transaction will be. Peppered throughout 1026.37(f) and (g) are words like "the consumer will pay" or the wording in bold in the quoted verbiage above.

If you're in a state (like Texas) that permits a deep discount for a simultaneously issued lender's policy when an owner's title policy is issued, but the lender's policy is required, the lender's policy must be disclosed with the undiscounted premium (see instructions in Comment 37(f)(2)-4. That's the case whether or not you disclose the optional OTI policy in Section H.

I'll add here that Randy Carey told me that Texas is issuing its own disclosure requirements relative to title insurance premiums, and they are likely not to be the same as those in Regulation Z. That will require you to provide a second disclosure with those Texas requirements.

RR Joker:
If the best information that you have at the time you deliver the Loan Estimate is that the borrower will not, or is not likely to, pay for a service that the bank does not require, such as an OTI policy, you don't include it on the LE. But if it's the custom in the area that the borrower would pay for it, you need to include it unless you know the borrower has opted not to do it or you know that it's not being paid for by the buyer/borrower (suggestion: document the source of that knowledge). The reason? You don't want a good faith cure. You cannot omit from Section H a service that you have reason to believe the borrower is likely to pay for because that would mean your omission would not be in good faith. For an example, see the discussion at the end of Comment 19(e)(3)(iii)-3 beginning with the words "But, for example,..."

Because of the way that 19(e)(3)(i) and 19(e)(3)(iii) and their commentary are written, an omission not in good faith of a service the consumer is likely to pay for will not comply with .19(e)(3)(iii), and will therefore be subject to .19(e)(3)(i), which allows no tolerance for increases.
Posted By: rlcarey

Re: Owner's Title Insurance - 06/19/15 06:23 PM

There is a reason that you are to specifically label OTI as "optional" unless you are requiring it.
Posted By: Truffle Royale

Re: Owner's Title Insurance - 06/19/15 06:23 PM

Maybe it's because this is such an about-face from the current rule regarding OTI, but I still don't get this.
From your quote above, John,
Quote:
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
the OTI is:
*in connection with the transaction; and
*the consumer has contracted via the OTP to have a person other than the creditor or loan originator pay at closing;
so how can it be left off the LE?

sorry if this is Friday brain but I'm just not getting this.
Posted By: John Burnett

Re: Owner's Title Insurance - 06/19/15 06:39 PM

Truffle Royale:
You're misquoting it and misinterpreting it. As written, the contract reference is about things the borrower contracts to pay to a third party at closing. Example: an optional radon inspection or pest inspection.

Again, the overriding rule on the Loan Estimate is that it includes the costs the consumer/borrower will, or is likely to, pay if the loan is consummated.

And you are correct, it's different from the GFE, and OTI is a good example of something being done differently. On the GFE, you show your estimates of the discount for simultaneous issuance of LTI and OTI as the premiums are quoted -- with the discount applying to the lender's policy. But that practice makes the borrower who reads the OTI premium (full premium) think that he'll be paying the discounted premium for the lender's policy if he opts out of the OTI, and that's misleading and creates an 11th-hour surprise for the borrower. Or, as Randy suggests below, you're showing the full premium on both sides to avoid a cure, which inflates the borrower's perception of the total cost. At least that problem is eliminated with the CFPB's treatment of the disclosure.
Posted By: rlcarey

Re: Owner's Title Insurance - 06/19/15 07:15 PM

Look at this another way.

In Texas, where they are deep discounts for simultaneous purchase, Banks were only left with one real option. Estimate the lender policy at the full non-discounted rate and also estimate the owners policy at the full owner's premium amount.

Thus, never coming close to providing a accurate estimate of closing costs.

A lender could not estimate the lender's policy at the discounted rate because if the applicant decided not to purchase an owners policy, you just blew your tolerance out of the window.

Everyone has to keep in mind that how title insurance works, how it is priced, who typically pays, and whether it is usually purchased by either the lender or the applicant varies widely throughout the nation.

Just because the old system may have worked well for you, there may be more for which it didn't work at all.

At least we all play by the same rules now.
Posted By: RR Joker

Re: Owner's Title Insurance - 06/19/15 07:30 PM

Thanks y'all.
Posted By: Truffle Royale

Re: Owner's Title Insurance - 06/21/15 03:41 AM

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!
Posted By: ILMF2016

Re: Owner's Title Insurance - 05/19/16 10:49 PM

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?
Posted By: John Burnett

Re: Owner's Title Insurance - 05/23/16 01:28 PM

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.
Posted By: ILMF2016

Re: Owner's Title Insurance - 06/03/16 11:03 PM

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?
Posted By: John Burnett

Re: Owner's Title Insurance - 06/06/16 12:19 PM

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).
Posted By: ILMF2016

Re: Owner's Title Insurance - 06/06/16 04:54 PM

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?
Posted By: ILMF2016

Re: Owner's Title Insurance - 06/06/16 09:46 PM

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?
Posted By: John Burnett

Re: Owner's Title Insurance - 06/07/16 12:57 PM

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.
Posted By: John Burnett

Re: Owner's Title Insurance - 06/07/16 01:04 PM

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.
Posted By: ComplyCycle

Re: Owner's Title Insurance - 08/09/17 05:45 PM

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.
Posted By: rlcarey

Re: Owner's Title Insurance - 08/09/17 06:01 PM

1. Yes
2. How or why would anyone force an owner to buy title insurance??
Posted By: ComplyCycle

Re: Owner's Title Insurance - 08/09/17 06:40 PM

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.
Posted By: John Burnett

Re: Owner's Title Insurance - 08/10/17 03:11 PM

Correct.
Posted By: Nico

Re: Owner's Title Insurance - 10/26/17 05:09 PM

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.
Posted By: RR Joker

Re: Owner's Title Insurance - 10/26/17 05:52 PM

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
Posted By: rlcarey

Re: Owner's Title Insurance - 10/26/17 06:18 PM

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?
Posted By: Nico

Re: Owner's Title Insurance - 10/26/17 07:30 PM

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.
Posted By: raitchjay

Re: Owner's Title Insurance - 10/26/17 07:44 PM

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.
Posted By: rlcarey

Re: Owner's Title Insurance - 10/26/17 07:57 PM

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.
Posted By: raitchjay

Re: Owner's Title Insurance - 10/26/17 07:59 PM

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?
Posted By: raitchjay

Re: Owner's Title Insurance - 10/26/17 08:02 PM

Now if the contract states that our borrower will pay what are typically seller fees, then yes, those get included on the LE.
Posted By: Nico

Re: Owner's Title Insurance - 10/26/17 08:06 PM

I agree with you - now to convince my QC department! Thanks for all your help!
Posted By: RR Joker

Re: Owner's Title Insurance - 10/27/17 12:51 PM

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).
Posted By: rlcarey

Re: Owner's Title Insurance - 10/27/17 01:01 PM

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.
Posted By: RR Joker

Re: Owner's Title Insurance - 10/27/17 03:03 PM

Randy, I believe that statement came from John in another thread I searched yesterday. None of it makes much sense to me, to be quite honest!

so is what you are saying is that the full LTI would be shown, if applicable and required?
Posted By: PJeanG7

Re: Owner's Title Insurance - 10/27/17 03:52 PM

If we cannot "require" any documents at the time the application is triggered, then we may not have the Purchase Contract to refer to an insure that the customary area practice is being followed. In those instanced I would show the Owners Title Insurance. In areas where there are customary practiced and the seller being Fannie/Freddie or Builder, are not followed and are outlines as such in their contracts. If you choose not to disclose the OTI without a contract and later discover one of the exceptions to apply, then we create a tolerance cure. I do not believe that making a judgement of customary practices then an error on our assumption is a Valid COC to add the cost.

Location: Maryland. High Transfer Taxes, customary split unless you feel the burn of Fannie or a Builder, that will never pay. If you go off the assumption of Customary you will quickly realize: Very High Fee Variance. "Customary" and Lender Assumption should not go hand in hand on the LE.
Posted By: rlcarey

Re: Owner's Title Insurance - 10/27/17 04:08 PM

How does disclosing or not disclosing something in Section H create a tolerance cure?
Posted By: PJeanG7

Re: Owner's Title Insurance - 10/27/17 04:29 PM

How do you defend that we did not disclose an Optional Fee to a Consumer when we did not have evidence that supported the non disclosure other than the assumption that the transaction followed the customary? I recall, but will need to research, that we do not have coverage to add a fee that we omitted on the first disclosure, at the base, I do not think we are acting in good faith, when relying on an assumption....but I will research it.
Posted By: Lakeminded

Re: Owner's Title Insurance - 10/27/17 04:33 PM

Randy, I can speak to PJG2000's situation, and maybe I'm taking an incorrect position, but usually what happens is no one reads the PSA until the CD is being prepared (reading is highly overrated) and then we have an increased borrower costs in H, and we should have reasonably known about it over the past few weeks - is it in good faith to add this fee during the closing event? It hasn't been a question for which I have an easy answer for - so we currently default OTI as a required item on the LE. Maybe the fee isn't in a protected category, but does that change what is in provided to the consumer "In Good Faith"?
Posted By: rlcarey

Re: Owner's Title Insurance - 10/27/17 05:17 PM

"but usually what happens is no one reads the PSA until the CD is being prepared (reading is highly overrated) "

If you issue an LE or a revised LE with that in your possession and do not disclose accordingly, that is when you have a good faith issue.

I am not really arguing that adamantly concerning going one way or the other in the "customary" situation, as that decision is specifically a fact based situation on which a lender has to make their own business decisions.

Know facts however are another issue.