In our area, real estate sales contracts often require the seller to pay the owner’s title insurance premium. The title company typically provides a simultaneous issue discount. However, one local title company was recently purchased by an out-of-state company that does not provide simultaneous issue discounts and will not provide a TRID calculation sheet showing the fees without a simultaneous issue discount. Instead, it provides the actual amounts of the lender’s and owner’s policy premiums with no corresponding seller credits. Does Illinois law require us to reflect the seller credit on the Closing Disclosure (CD)? When we checked with the title company, they confirmed that there were no simultaneous issue discounts built into the premiums.

Oct 14, 2021

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We are not aware of an Illinois law requiring disclosure of seller credits or imposing particular disclosure requirements for title insurance premiums.

Under the TRID requirements in Regulation Z, when a seller has agreed to pay the owner’s policy premium — and no discounts are being offered — the seller’s credit should reflect the full amount of the owner’s premium. We believe the Loan Estimate and CD should disclose the full amount of the lender’s and owner’s policy premiums. If the seller has agreed to pay the full cost of the owner’s policy premium, then the full amount of the premium would be reflected as a seller credit. In that case, there would be no excess seller’s credit to account for, since the amount of the seller’s credit would match the full cost of the owner’s policy premium (which would not be the case if the title company provided a simultaneous discount).

For resources related to our guidance, please see:

CFPB, Factsheet: TRID Title Insurance Disclosures, page 5 (June 9, 2020) (“When the consumer obtains lender’s and owner’s title insurance, but does not receive a simultaneous rate (because, for example, the two policies are purchased from different companies), the disclosure of lender’s and owner’s title insurance is the amount of the full policy premiums and the total for both policies is also the same as the amount paid.”)

CFPB, Factsheet: TRID Title Insurance Disclosures, page 3 (June 9, 2020) (“If the purchase and sales contract between consumer and seller indicates that both lender’s and owner’s title insurance will be purchased from the same company and the seller will pay the full owner’s policy premium rate (as opposed to a discounted rate), there may be a difference between the cost of owner’s title insurance disclosed and the disclosed seller’s credit. Given the disclosure formula for the owner’s title insurance cost when there is a simultaneous rate for lender’s title insurance, in this situation there may be excess seller’s credit beyond the disclosed cost of owner’s title insurance. Because the seller’s credit may be in excess of the disclosed owner’s title insurance cost, the disclosed amount of the seller credit left over after application to the owner’s title insurance cost can be disclosed in three different ways on the Closing Disclosure:

1. Shown as a credit towards the amount of the lender’s premium or any other title insurance costs for premiums or endorsements in the Loan Costs Table or Other Costs Table (12 CFR §§ 1026.38(f) and (g)); or

2. Added to and shown in aggregate with other seller credits in the Summaries of Transactions tables as a general Seller Credit (12 CFR § 1026.38(k)(2)(vii)); or

3. Disclosed as a stand-alone seller credit on another blank line in the Summaries of Transactions tables (12 CFR § 1026.38(k)(2)(viii)).”)