IBA Compliance Connection

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Where should the $3 mandatory title fee be disclosed on the Loan Estimate? Should this be disclosed in “Section B. Services You Cannot Shop For” or in “Section C. Services You Can Shop For”? We believe it should be Section B since the fee is applicable in every transaction with a title policy and is always $3.

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We believe the $3 mandatory title fee, which is required by Illinois law, should be disclosed in “Section E. Taxes and Other Government Fees.”

The Illinois Title Insurance Act requires title insurance companies to remit to the state of Illinois “an amount equal to $3 for each policy issued by all of its agents in the immediately preceding calendar year.” Regulation Z requires “recording fees and other government fees and taxes” to be disclosed under Section E as part of the “Recording Fees and Other Taxes.” Because the title insurance company is collecting and remitting this fee to a governmental entity, we believe the fee should be placed in Section E and aggregated as part of the “Recording Fees and Other Taxes.”

For resources related to our guidance, please see:

  • Illinois Title Insurance Act, 215 ILCS 155/14(b) (“Each title insurance company shall remit, for all of its title insurance agents subject to this Act for filing an annual registration of its agents, an amount equal to $3 for each policy issued by all of its agents in the immediately preceding calendar year.”)
  • Regulation Z, 12 CFR 1026,37(g) (“Under the master heading ‘Closing Cost Details,’ in a table under the heading ‘Other Costs,’ all costs associated with the transaction that are in addition to the costs disclosed under paragraph (f) of this section. The table shall contain the items and amounts listed under six subheadings, described in paragraphs (g)(1) through (6) of this section.

(1) Taxes and other government fees. Under the subheading ‘Taxes and Other Government Fees,’ the amounts to be paid to State and local governments for taxes and other government fees, and the subtotal of all such amounts, as follows:

  • (i) On the first line, the sum of all recording fees and other government fees and taxes, except for transfer taxes paid by the consumer and disclosed pursuant to paragraph (g)(1)(ii) of this section, labeled ‘Recording Fees and Other Taxes.’”)
  • Regulation Z, Official Interpretations, Paragraph 37(g)(1), Comment 2 (“Any charges or fees imposed by a State or local government that are not transfer taxes are aggregated with recording fees and disclosed under § 1026.37(g)(1)(i).”)