Disclosing Owners Coverage Title Insurance on a Good Faith Estimate

By
Mortgage and Lending with Hunt-Miller Insurance Agency

I would like to provide all of my client's with an accurate Good Faith Estimate... this is very difficult to do when closing attorneys "sneak" in owner's coverage title insurance - AT CLOSING.  I try to make it a point that when the request for title commitment is sent to the chosen closing attorney that I ask for:  Insured Closing Protection Letter, Title Commitment with property tax information and Chain of Title, Wire Instructions, Email address for closing package AND a list of borrower's fees associated with this closing.  I use the fee sheet given as a tool to prepare an accurate Good Faith Estimate.  Generally I receive a form letter list of fees and not an accurate list specifically designed for the borrower.  Lender's coverage title insurance is required, I use the .25% formula (Georgia) on my Good Faith Estimate.  Owner's coverage title insurance is optional, so it is NOT included in my Good Faith Estimate neither is a binder fee of $50 or more.  I understand that owner's coverage title insurance is a good add-on at the time of closing when the borrower has equity in the property - however, if it is a 100% financed transaction, the lender has taken all of the risk in title defects - until there is equity... at which time the closing attorney should contact their database and offer the owner's coverage.  I need an accurate total to insert into the title insurance line on the Good Faith Estimate.  Neither my borrower or I like surprises at the closing table.  This increases the closing costs and funds to close have already been verified without the added expenditure.  It is very important that this coverage (since it is OPTIONAL) is pre-sold and pre-disclosed.  It is unacceptable to have to re-schedule a closing and re-draw documents due to non-disclosure.  Many times the entire file has to go back to the underwriter to be re-approved and assets re-verified... NON-DISCLOSURE COSTS EVERYONE TIME, MONEY, EFFORT AND WEARS ON THE PATIENCE.  I would like to hear from some other loan officers that CARE about PROPER DISCLOSURE and Closing Attorneys that practice this forced sale practice.  I beckon opinions, advice, and how you handle this type of practice.  Thank you.

Comments (4)

Rebecca Schrader
Competitive Insurance of Dundee - Dundee, FL

Why can't the borrower demand that it's removed before signing?

Jun 20, 2008 03:22 AM
Melissa Cochran
Hunt-Miller Insurance Agency - Macon, GA

Schrader Inc.  Thank you for the reply.  They can.  However, why should they have to?  Why should it be necessary?  Why should it create more work at the closing table to have to have the HUD restructured and approved again?  Especially when the entire page 2 will have to be restructured.  The HUD should be a perfect match to the GFE.  I am required to provide a FINAL Application that matches the HUD (if my GFE is wrong - the Final Application's closing costs are also wrong).  I don't like having to do double the work due to negligence of proper disclosure.

Jun 20, 2008 03:33 AM
Anonymous
Courtney

Is  owners coverage essential?

Jun 16, 2009 06:04 AM
#3
Anonymous
Melissa

Courtney,

Thank you for the question.  I have asked this many times.  The closing attorneys explain it as protection for the borrower / buyer should any title issues arise after closing and that Lender's coverage protects just the lender - not necessarily the purchaser.  This would be a great question for the attorney's to explain the benefits besides a padding of the pockets.  Also, this title insurance protection is null and void once the property is sold or refinanced... so is it really a benefit?

Jun 16, 2009 06:20 AM
#4