Now I have always been one that approaches things with an open mind. I have always felt that there are two sides to every story, and that it is important to get all the facts before making my own judgement. I may fall on one side or another, but I at least have an understanding of where the other side is coming from. But when it comes to this whole thing on how title insurance is supposed to be disclosed on the LE, I have never understood where they were coming from.
Not sure how many of you have been keeping up on the bills bouncing through Washington lately, but on Tuesday the House passed a bill that would amend RESPA to allow for the proper disclosure of title insurance premiums. For those of you that may not be impacted by this change I will go ahead and break it down for you. There are a handful of states that have unique title insurance pricing structures, that when the member purchases both owner’s and lender’s title insurance they are provided a discount on the lender’s policy. Now you may be thinking “Okay, so what is the big deal”. Well, under TRID lenders in those states had to do a ULI type of conversion to disclose those fees.
Under the current rule a lender must disclose the lender’s title premium based on the full premium rate without the discount. They would then disclose the owner’s premium by adding the full owner’s premium and discounted lender’s premium together, and then subtract the amount for the full lender’s premium. (Huh?)
Now can someone explain to me how that makes any sense at all? I know that a lot of man hours went into creating these regs, but I am guessing this part was developed at one in the morning after all the coffee ran out. I am just not sure how this helps create “clarity” around the costs associated with the loan. Even if their goal was to make the member aware of the full cost if they didn’t purchase both title policies, why wouldn’t you just require that the lender disclose the full premium amount for both. I mean, come on now folks.
With all that being said, hopefully there is some relief in sight. The bill that recently passed in the House would require that lenders disclose the accurate amounts, including any discounts as required by State regulation or the title companies rate fillings. Here is to hoping they have all had enough coffee, and are caught up on sleep.