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American Land Title Association Applauds House for Passing Bill to Fix TRID
press release, American Land Title Association
   

The American Land Title Association (ALTA), the national trade association of the land title insurance industry, thanks the U.S. House of Representatives for passing The TRID Improvement Act, H.R. 3978, a bipartisan bill that corrects the inaccurate disclosure of title insurance premiums on the TILA-RESPA Integrated Disclosures (TRID) and helps consumers understand the true cost of their real estate transaction.

The bill, introduced by U.S. Rep. French Hill, amends the Real Estate Settlement Procedures Act (RESPA) to require the Consumer Financial Protection Bureau (CFPB) to allow the accurate disclosure of title insurance premiums and discounts to homebuyers. Under the current regulation, the CFPB does not allow title insurance companies to disclose available discounts for lenders title insurance on the government mandated disclosures.

“Although the bill has been made part of a larger legislative package, the genesis of the bill is about improving transparency and making sure consumers receive disclosures that accurately show the cost of the one-time fee that protects their property rights,” said Michelle L. Korsmo, ALTA’s chief executive officer. “Our research shows that 40 percent of consumers feel confused by the CFPB’s requirement to provide inaccurate pricing on title insurance. We’re thankful for Representative French Hill championing a straightforward fix that benefits consumers across the country. This isn’t about limiting Dodd-Frank. We’re eager to get this bill introduced and passed in the Senate and eliminate the inconsistencies in mortgage documents that cause confusion for consumers.”



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So how does this reconcile with decades of ALTA advertising, "Buy Owner's Title Insurance for a small additional premium..."  So now we will disclose the full owner's premium, which in most states is not mandatory, show the mortgage policy at $100 or so, have the buyer walk in to the closing and decide they don't want the owner's policy, but do want the $100 mortgage policy, only to find out that isn't going to happen, and the closing now is postponed for new delays for disclosures... Guess we need to make Owner's mandatory in this state.

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That is a good point, but it was terribly misleading to show the full cost of the owners policy and the full cost of the loan policy.  Maybe they need some way to show them both, e.g. The cost of the owner's policy and loan policy is $675.00, or the cost of the loan policy only is $400.00.  

I am in an area where the owner's policy is frequently not purchased.  As an attorney, I always recommend it.  Around here it has customarily been a buyer's expense, but I encourage my seller-clients to split the premium with the buyer in a lot of cases.  It would be nice if the owner's policies became the norm. 

Best,
Robert A. Franco
SOURCE OF TITLE 

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Since 1981 when I first started handling closings, I have always disclosed with the full amount of the mortgage policy and with the additional premium for the owners.  The fact is the procedure varies from jurisdiction to jurisdiction, and should not have been altered.  I doubt anyone really misunderstood the premiums, or if they did, then I would be surprised they did not have this explained to them prior to the closing.  In Louisiana we do have a requirement of disclosing to the SFR1-4 buyer the fact that owner's is available, the price of basic and enhanced coverage with or without a mortgage, a cumbersome process, yet it give the title agent a reason to discuss this with the buyer.  Actually I along with most other title companies in our area, sell 90-95% owners policies at all closings, residential or commercial.  Education of the real estate licensees has helped them to understand the liability issues, and the cost savings of a few hundred dollars at closing versus attorney fees just to meet and discuss a potential claim.

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