Well, it’s time to make your borrowers find their own title insurance. The CFPB is back at it with a ridiculous fine.
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Time To Make Your Borrowers Find Their Own Title Insurance
admin - Monday October 2, 2017
Okay, yea, you may consider this trivial, I get it. However, we who are in the Title Insurance business know this. This is title 101. It’s taught no matter where you go. How did these people not have an Affiliated Business Disclosure on hand? It was in RESPA, HUD and CFPB guidelines.
I’m not sure what all the rage is about. The fine is pretty high, but there is no mention of the dollars involved. Disclosing ownership interest in third party providers is nothing new (it goes back to RESPA 1 in the 70’s).
Title insurance is unique in that the cost structure varies considerably by state (insurance is regulated at the state level). Custom and tradition are also an issue as in many states or regions it is customary for one party to pay for the insurance (seller or buyer) unless negotiated in the contract (another hot button issue with Realtors). Fourteen states have the seller customarily paying the owner title portion with the lender policy being paid by the buyer. So shopping may or may not be beneficial, again depending on the state, if the seller pays the owner policy and the borrower gets the lender policy which often has a discount based on purchasing that same owner policy from a particular company.
The bottom line is that the CFPB has had title insurance and settlement services in their sights for years now, and still have not figures out how to handle it (just look at the Loan Estimate which often shows the incorrect closing costs in a state where the seller usually pays for insurance).
Melanie, the fine was $1.25 Million. You missed the point, there was no finding of harm, just enforcement for enforcement’s sake.
There was in fact a finding of harm. Meridian is paying back 7,000 consumers the difference between the average title fees and the price Meridian charged which works out to about $175 per consumer. What they did was illegal regardless of harm. You may not like it, but it has been Federal law for nearly 50 years now.
However, the CFPB does not appear to require lenders to disclose ownership of appraisal management companies. Consumer hurt?
Do you know if your title company is providing to the borrower the 2013, 2010, 2006 or even a 1998 policy? This is where the consumer is hurt. We see agents and loan officers recommending a title company because of a relationship and nothing to do with product, pricing and ratings. The customer is often harmed because they are paying top dollar and receiving the worst possibly policy. They are paying for a Cadillac and getting a Pacer.