The CFPB has updated their TRID FAQs and released a Factsheet on disclosing title insurance. The Factsheet addresses the labeling of fees for lender’s and owner’s title insurance premiums, as well as, properly disclosing those amounts to be in line with TRID’s requirements.
“TRID Math” for title insurance is a thing and, for policies where there is a simultaneous issue discount, it has caused more than a few headaches over the years. While you need to disclose the full amount of any lender’s title insurance premium on both the Loan Estimate and Closing Disclosure, the disclosed amount of the owner’s policy needs to be calculated as follows:
Full owner’s policy premium + Simultaneous premium for the lender’s policy – Full lender’s premium
The CFPB reiterates this formula must be used regardless of whether the disclosed amounts are different than what appear on other state forms and/or how the premiums are quoted.
Additional challenges can come up even after you’ve determined the correct amounts to be disclosed. For example, if a seller is to contribute the full amount of an owner’s policy, you end up left with funds from the seller above and beyond the disclosed cost. If you run into this, you have some options. You can credit those amounts to other title insurance costs or show them as a seller credit in the Summaries of Transactions table. Another potential challenge is ending up with a negative amount to disclose for owner’s title insurance, because of the “TRID Math”. In the Factsheet, the CFPB gives some sample scenarios you may find helpful.
Much to the disappointment of many, “TRID Math” doesn’t seem to be going anywhere anytime soon. If you struggle with it, we have a number of TRID training opportunities where we address it. We’re also happy to walk you through some of those extra-challenging scenarios as they come up, through our phone and email consulting services.
The CFPB also updated their TRID FAQs to address things such as the requirement for seller-paid costs to be disclosed to the borrower, calculating the total of payments (including the impact of any negative prepaid interest) and disclosure signature requirements.
Be sure to stay tuned to our magazine, Banking on BCC, for more information!
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David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.