Topic: Title Insurance
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If we are the lender on a mortgage loan subject to the TILA-RESPA Integrated Disclosure (TRID) rules, can we also act as the settlement agent? If so, should we list the bank’s name on the Closing Disclosure as the lender and as the settlement agent? Can we also leave the other “Settlement Agent” fields blank, including the File #?
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Yes, a lender may act as its own settlement agent. We are not aware of any federal or Illinois law that would prevent a financial institution from conducting its own mortgage loan closings, and in fact, this is a common practice at many institutions when closing second lien loans. We do not believe that a…
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We read that the Illinois Department of Financial and Professional Regulation (IDFPR) repealed its rules regarding the Predatory Lending Database Program. Does this mean that a Certificate of Exemption is no longer required for covered transactions?
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No, a Certificate of Compliance or a Certificate of Exemption still needs to be filed for covered mortgages. You are correct that the IDFPR’s administrative rules for the Predatory Lending Database program were repealed, effective August 28, 2017. However, the law establishing this program — the Residential Real Property Disclosure Act (Act) — has not been repealed. The Act,…
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Are borrowers required to purchase their residence at least six months before they are eligible for a cash-out refinance? Is a “24 month chain of title” required on title commitments for cash-out refinances?
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We are not aware of any law or regulation that requires a borrower to have purchased their property at least six months before obtaining a cash-out refinancing. Likewise, we are not aware of any requirement for a lender to obtain a “24 month chain of title” report prior to a refinancing. However, we do note…
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Do we have to disclose an owner’s title insurance premium on the Loan Estimate, even if we have a copy of the purchase agreement and it states that the seller will pay the premium? If we do need to disclose it, can we include a “Seller Credit” in Section H (Other) with a negative amount to offset the owner’s policy premium? Also, should we disclose the premium amount with or without the “simultaneous issuance” discount?
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Yes, we believe that you should include the owner’s title insurance premium on the Loan Estimate. Regulation Z requires the Loan Estimate to include the owner’s optional title insurance charges under “Other” (assuming that your bank does not require the borrower to purchase owner’s title insurance). It also is appropriate to list the owner’s title…
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Are we required to provide a notice of the right to choose a title insurance company to applicants for dwelling-secured home equity lines of credit (HELOCs)? Depending on the HELOC amount, a borrower will be required to pay for a title search, a limited title insurance policy, or a full title insurance policy.
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We recommend providing a notice of the right to choose a title insurance company to all HELOC applicants who will be required to pay for title insurance, as defined in the Title Insurance Act. Under the Title Insurance Act, when a borrower is required to pay for title insurance for a loan secured by the…
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We do not require borrowers to purchase owner’s title insurance. On our Loan Estimates, we disclose the owner’s title insurance premium under the heading for “Other.” Because this is paid by the seller, we also list it as a “Seller Credit” in the “Calculating Cash to Close” section. However, on the borrower’s Closing Disclosure, we do not include the owner’s title insurance premium; we include it only when providing a separate Closing Disclosure to the seller. Is that correct?
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We believe that you should include the owner’s title insurance premium on the borrower’s Closing Disclosure. Regulation Z requires the Closing Disclosure to include optional title insurance charges, even if they are paid by the seller, under “Other,” in the “Seller-Paid” column. We believe that your bank is correctly disclosing the owner’s title insurance premium…
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We issued a Loan Estimate for a mortgage loan secured by a mobile home. We did not disclose any property taxes due at closing, but we just learned today that for mobile homes, the borrower will have to pay property taxes at the closing for the remainder of the year. Do we have to reimburse the borrower for that charge, since we did not disclose it? Also, the estimated title insurance costs were inaccurate – the owner’s title policy cost decreased by $127, but the lender’s policy increased by $130. Do we have to reimburse for $130, or can we offset that amount by the decreased cost of the owner’s policy? We do not permit borrowers to shop for the lender’s title insurance provider.
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We believe that you should reimburse the customer for the increases in both cases, since there have not been any changes that would qualify as a “changed circumstance” permitting you to issue a revised Loan Estimate. Regulation Z does permit lenders to revise the charges disclosed in a Loan Estimate, but only if there is…
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When a title insurance agent is acting as settlement agent for a residential mortgage closing, do we need to show the agent’s Illinois title insurance license number on the Closing Disclosure?
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Yes, we believe 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) identified in the table…
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When providing settlement services, does a title company or its individual employees need a Nationwide Mortgaging Licensing System (NMLS) number in Illinois? Our title company said they don’t need an NMLS number, but our auditor said that we can’t leave the title company’s NMLS number blank on our closing disclosures.
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In Illinois, title companies and their employees are not required to obtain an NMLS identification number when they are acting as settlement agents, provided they are not receiving compensation for “brokering, funding, originating, servicing or purchasing of residential mortgage loans.” The CFPB’s Closing Disclosure includes a table on page five entitled “Contact Information” that contains…
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In Illinois, is a title company or title agent required to obtain a Nationwide Mortgage Licensing System (NMLS) registration when they are acting as closing agents? If so, should we list it in the Closing Disclosure?
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In Illinois, title companies and their employees are not required to obtain an NMLS identification number when they are acting as closing agents, provided they are not receiving compensation for “brokering, funding, originating, servicing or purchasing of residential mortgage loans.” The CFPB’s Closing Disclosure includes a table on page five entitled “Contact Information” that contains…