Title & Escrow News and Information
When the CFPB wrote the new rule, they didn’t see the need for the cost of the owner’s title policy to be disclosed on the loan estimate if the borrower is not going to pay for it. The new rule only requires the lender to disclose the cost of the owner’s title policy on the Loan Estimate if the borrower will be paying for the policy. Unfortunately, if the borrower is paying for it, the charge must be labeled as optional on both the loan estimate and closing disclosure. This is a concern because telling a consumer owners title insurance […]
As the real estate community makes the transition to the new rules and new forms set forth by the CFPB beginning August 1, there will be a period where existing escrow transactions will use the HUD-1 Settlement Statement and new transactions will begin using the new Closing Disclosure Form.
The Loan Application Date is the Determining Factor
The key factor in determining which form will be used is the date of the loan application.
In other words, transactions with loan applications made before August 1st will use the HUD-1 Settlement Statement and transactions with a loan application date after August 1st will use the new Closing Disclosure.
As part of the new CFPB rules, creditors are required to disclose the cost of a Title Insurance policy if it’s the borrower’s responsibility to pay for it. However, the charge must be listed as “optional” on both the Loan Estimate and Closing Disclosure, which might discourage homeowners from buying this protection.
So let’s talk about this word, “optional.” Yes, it’s technically optional, but for most people, owning a home is the biggest investment of their life! Don’t you think they should protect it? And by the way, creditors require their own title insurance policy. That’s how important they think it is to protect their investment.