Owner's Title Insurance - Optional

I have received two differing answers on whether to list the optional fee for owner's title insurance on the LE.

Our state banking association advises that we are not required to include the fee on the LE if the purchase is optional. They go onto say it can be included in Section H if we would like to inform the consumer of it's availability, using "optional" behind the fee name of course.

On the flip side, our vendor who reviews a sample of our residential real estate files for compliance indicates their interpretation of 1026.37(g)(4) and commentary, is we should list it on all purchases with the "optional" description.

Looking for some feedback, to list or not to list?

The final rule, commentary, etc. all seems to address in their examples of Section H that Owner's Title is (optional), so even though we "strongly encourage" all borrowers to purchase Owner's Title, and in our state it's fraction of the cost when the required Lender's Title is also purchased, we will always disclose this as (optional) on all purchase LE's.

Preamble: 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.

I'd like to resurrect this old thread since we're revisiting our process for disclosing owner's title insurance.

In our state, it's customary for the seller to pay this fee (since this is how our purchase contracts are written). Because the seller pays for owner's title and it's not a cost the borrower has to pay, I am hoping we can omit this fee from the initial LE. Based upon the rule, preamble cited above, and spirit of TRID to only disclose accurate applicant costs (not likely to be help me in a disagreement with examiners, I know), I believe we are fine to omit this fee.

My challenge is that I've received conflicting responses from the ABA and my state banking association, so I'd like a third-opinion to break the tie, please.

Do you think we'd land in any regulatory hot water for not disclosing owner's title on the initial LE? Thank you.

Are you in a simultaneous issue discount State?

Yes.

Then you are still required to disclose the full lender's title policy amount on the LE and whether or not you disclose the owner's title policy amount on the LE, it will only impact the amount of the seller's credit that you would disclose.

Thank you. It sounds like we have options, which is nice.

One more follow-up, please: after the June 2020 CFPB TRID Title Insurance Factsheet, I thought we couldn't list a seller credit on the initial LE any longer since one was not included in the prescribed formula?

I am not sure it says that.

It gives you three options as to how to disclose the seller's credit on the CD. That does not mean that the seller's credit is totally left off of the LE - Just that you are still required to disclose the full lender's title policy on the LE regardless of whether there is a seller's credit or not.

Understood. Thanks for your help.