This post is specifically for you agents out there.
With the new GFE that is effective on January 1, the owner's title insurance policy must now be quoted as a Buyer fee on both the GFE and the HUD-1. Why is this important? Let's take a typical scnenario. Let's say you write an offer for an investor and ask for a 2% credit from the Seller (2% also happens to be the maximum amount for investment properties).
Prior to January 1, the owner's policy for title insurance was only shown on the Seller's side of the HUD-1 and never even showed up on the Buyer's side. Post January 1, this fee is disclosed as a Buyer fee and shows up on the Buyer's side of the HUD-1. The Seller can still pay for this expense; however, since it is now considered the Buyer's closing cost, the amount paid for by the seller must be subtracted from the maximum Seller credit. This will also affect FHA transactions once FHA flips the switch (Summer of 2010) to limiting the Seller contribution to 3%.
This is definitely something to pay attention to. When you are writing an offer, be sure to state whether the owner's policy is part of what you are asking the Seller to pay for or if it is over and above what they are crediting. With FHA and investment properties, you may bump into the maximum allowed tolerances for Seller contributions quite easily.
It doesn't matter that the Seller has always paid for the owner's policy in the past nor does it matter that the purchase agreement specifically states the Seller will pick up the tab. It is now a Buyer's expense per the GFE and the new HUD-1.
I'm sure that others have also pointed this out - there aren't too many original thoughts out there these days. However, if I can help even one Buyer or Seller avoid potential issues in the future, a little repitition will go a long way.
Good luck in 2010 everyone!
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