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How do I provide a borrower the benefit of a simultaneous rate on a loan policy issued in conjunction with a second mortgage in a purchase transaction with two mortgages?

When a lender requires a Closing Disclosure for the second mortgage the title insurance premium must be disclosed by applying the same TRID rule as for the first mortgage. Furthermore, Florida currently requires the collection of the $3.28 surcharge for all policies except simultaneous issue. You must therefore disclose the TRID rate for the loan policy in the Loan Costs Section (B or C) and the surcharge in Section E. Taxes and Other Government Fees on the secondary CD.

If an owner’s policy is being issued in the transaction as reflected on the primary CD, you can provide a credit on the secondary CD for the difference between the TRID rate and simultaneous rate coupled with credit for the surcharge in section H. Other. Subtract the simultaneous rate from the TRID rate and add the $3.28 surcharge to the difference. Disclose this sum in the borrower’s column as a negative number and describe the entry as “Title - Owner’s Coverage credit to (agent/agency).”

If borrower opts out of the owner’s policy on the primary CD, removing that product on the primary CD and the credit on the secondary CD will be all that is necessary.

How do I show a reissue credit?

The reissue credit is not a true credit; rather it is a less expensive promulgated rate which is applied to new policies when a qualifying prior policy has been provided (See Rule 69O-186.003, F.A.C.). Therefore, the premiums disclosed on the CD will already reflect the “reissue credit” though it will not be separately stated.

You are free to inform the client about the savings from the application of the reissue rate by showing the savings on a separate addendum or printout.

How is title insurance premium calculated and disclosed on the Closing Disclosure?

The premiums for owner policies, loan policies, and endorsements, continue to be calculated using Florida’s promulgated rate structure. (This includes use of the discounted rates for simultaneous issue, substitution loan, new home purchase and reissue.) The display of premium on the Closing Disclosure in a purchase transaction are effected by making a calculation for a stand-alone loan policy, including endorsements, and a separate calculation of the cost of the purchase of both policies including endorsements. The difference between the two sums is the “incremental increase” attributed to the purchase of both policies.

The cost of a loan policy, and its endorsements, is disclosed on the Closing Disclosure as if there were no owner policy to be given (i.e. stand-alone loan policy). The reason TRID uses this method is based upon the premise that a borrower needs to know the cost of the policy required by a lender should the borrower choose not to purchase an owner’s policy. (This ignores a common scenario where the purchase of the owner’s policy is, by contract, being paid for by someone else, usually the seller.) The cost for the purchase of an owner’s policy is disclosed as the incremental increase attributed to the purchase of an owner’s policy when both policies are purchased.

The official commentary to the rule explains these procedures at http://www.consumerfinance.gov/eregulations/1026-Subpart-E-Interp/2015-18239#1026-38-g-4-Interp-1 and at http://www.consumerfinance.gov/eregulations/1026-Subpart-E-Interp/2015-18239#1026-37-g-4-Interp-2

If there are miscellaneous affidavits needed to clear the title, are they included in Line 01 (Recording Fees)? Does it matter if they are the seller’s responsibility?

Yes, all per-page recording fees will be totaled and entered in the respective columns on a single line: Line 01 (Recording Fees), even those which are the responsibility of the seller.

Any costs payable by the borrower for recording additional documents will be added to the itemized charges for recording the deed and mortgage and the total will be disclosed in the borrower’s column. Similarly, costs payable by the seller for recordings will be disclosed as a total in the seller’s column on the same line and will not be separately described.

If you wish, you may show a complete itemization of recorded documents on an additional page as a “customary recital.” In DoubleTime^®, the Recording Worksheet found under the Reports Tab serves that purpose.

In certain circumstances, a charge attributable to Buyer may become apparent after CD has been delivered (i.e. HOA fee attributable to the Buyer). How will the lender learn of this and will such a change require a new three-day waiting period?

A change in an HOA fee alone will not require a new three-day waiting period. A new three-day wait is only required when one of the following occurs:

Change in the Annual Percentage Rate (APR) as calculated by the lender
Change in the loan product offered to the consumer
Addition of a prepayment penalty to the loan product.

The lender will learn of changes when the settlement agent provides this updated information using the means of communication recognized by the lender. Many lenders are indicating they will use third-party cloud-based software such as Closing Insight to communicate with settlement agents.

Is there going to be a special “worksheet” to calculate the credit to the Buyer for the title fees in a contract where the seller pays for the owners’ policy?

In DoubleTime the rating calculator will produce a worksheet which reflects Florida rates. The Florida charges will automatically convert to TRID rates for display in the Closing Costs tables on the CD. DoubleTime will also populate a Florida Insurance Premium Disclosure you can use to compare Florida rating to TRID rating.

With that document you can subtract the Florida rate for the loan policy (which includes any endorsements) from the TRID rate for the same and the difference will be the adjustment amount for which the seller is responsible.

What if there is an error in disclosing closing costs? For example, what if a seller is charged for documentary stamps but it should be buyer’s expense? Does the three-day period restart?

Changes to the amount of documentary stamps or the party paying the stamps are not changes which require a new three-day waiting period. They will necessitate a revision and re-distribution of the Closing Disclosure so inform the lender of the correction as soon as possible. Read More »

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