Topic: Title Insurance
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Are financial institutions required to wire funds to settlement agents for real estate loan closings? We have had instances where we have had to wire funds from one account at our bank to another account at our bank. Is there an amount limit? Would we be exempt as a national bank?
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No, we do not believe financial institutions are required to wire funds to settlement agents for closings. Although the use of cashier’s checks generally is limited to disbursements of less than $50,000, Illinois law does allow options other than wired funds for disbursements of $50,000 or more at real estate closings (including cashier’s checks in…
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In an answer to a previous question, you indicated that the $3 mandatory title work fee that title companies charge should be put in the “Taxes & Other Government Charges” section of the Loan Estimate. However, we were under the impression that the fee goes with the title company charges in the “Can/Cannot Shop For” section. Can you provide any more information on this issue?
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We believe the $3 mandatory title fee should be disclosed in “Section E. Taxes and Other Government Fees” because the fee is required by an Illinois law and is remitted by the title company to a governmental entity. The Illinois Title Insurance Act requires title insurance companies to remit to the state of Illinois “an…
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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…
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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.
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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…
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We provide our loan customers with a list of service providers that includes the local office of a national title insurance company. The title insurance company has many locations, and they do not all charge the same fees. If a customer chooses a different location of the company than the one on our list, has that customer “shopped” for the service provider? When this happens, on which sections of the Loan Estimate and Closing Disclosure should we list the services?
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Whether your customer has “shopped” for the service provider when they use an office of a national title insurance company other than the one on your list depends on whether the chosen office is a separate legal entity from the one on your list. If the office location chosen by your customer corresponds to a…
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We would like to know which title fees may be excluded when conducting a HOEPA points and fees test. We understand that fees not paid directly to the bank or its affiliate are excluded, as well as certain title fees for title examinations and title insurance. However, can we also exclude other title company fees for closings, couriers, date down endorsements, closing protection letters, the Illinois Anti-Predatory Lending Database, etc.?
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Yes, we believe your bank is permitted to exclude the title company’s fees from the HOEPA points and fees calculation — provided that the fees are reasonable and neither your institution, nor an affiliate, receives any direct or indirect compensation in connection with the fees. Regulation Z permits your bank to exclude title-related fees from…
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When a farmland commercial loan is partially secured by second mortgage on a residence out of an abundance of caution, are we required to obtain title insurance for the residence? We have a loan secured by hundreds of acres of farmland, crops, vehicles, farm equipment, and an assignment of leases and rents, as well as a second mortgage on a residence and additional land surrounding the residence. We obtained title insurance covering the farmland, but not the residence and surrounding land. Should we have obtained title insurance covering the residence and surrounding land?
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We are not aware of a requirement to obtain title insurance covering real estate securing a loan when the lien is obtained out of an abundance of caution. Of course, title insurance is strongly recommended for real estate-secured loans, but we do not believe that title insurance is required for real estate that is taken…
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Do we have to disclose an owner’s title insurance premium on the Loan Estimate and Closing Disclosure when we know that this will be paid by the seller? We require owner’s title insurance and allow the borrower to shop for it, but typically the seller pays for the premium. If we do not disclose the premium on a Loan Estimate, wouldn’t this create a tolerance issue when including it on the Closing Disclosure?
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Disclosing a seller-paid premium for owner’s title insurance on the Loan Estimate is optional, but you must disclose this fee on the Closing Disclosure. With respect to the Loan Estimate, Regulation Z’s Official Interpretations provide lenders two options for disclosing the seller-paid premium for an owner’s title insurance policy. If the lender knows that the…
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When a title insurance agent acts as a settlement agent for a residential mortgage closing, we have been tracking down and using their Illinois title insurance registration number in lieu of an NMLS number on the Closing Disclosure. Is this still correct?
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Yes, we believe it is still true that when a settlement or closing agent is a registered title insurance agent, the Closing Disclosure should display the agent’s Illinois title insurance registration number. Regulation Z’s requirements for the Closing Disclosure include the disclosure of “a license number or unique identifier for each person (including natural persons)…
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Is the $3.00 fee that Illinois requires title companies to remit to the state for each title policy issued by its agents considered a Finance Charge?
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No, in our view this $3 fee should not be included in the finance charge when it is passed on to the borrower. Regulation Z exempts certain real-estate related fees from the scope of finance charges, including fees for title insurance “and similar purposes.” We believe this fee is excluded from the finance charge because…