When the CFPB wrote the new rule, they didn’t see the need for the cost of the owner’s title policy to be disclosed on the loan estimate if the borrower is not going to pay for it. The new rule only requires the lender to disclose the cost of the owner’s title policy on the Loan Estimate if the borrower will be paying for the policy.
Unfortunately, if the borrower is paying for it, the charge must be labeled as optional on both the loan estimate and closing disclosure. This is a concern because telling a consumer owners title insurance is optional may dissuade home buyers from purchasing the same protection their lender receives. Title insurance is an insurance product like no other. And protects the homeowner for as long as they own their home.
Here are 8 more reasons why title insurance is worth the cost.
- Title Insurance protects the interests of property owners and lenders against legitimate or false title claims by previous owners or lien holders. In effect it insures the investment, unlocking its potential as a financial asset for the owner.
- We access, assemble, and analyze title information, in addition to handling the escrow and closing process.
- Title problems are discovered in more than one-third of residential real estate transactions. These “defects” must be resolved prior to closing. The most common problems are existing liens, unpaid mortgages, and recording errors of names, addresses, or legal descriptions.
- An Owner’s Title Insurance Policy protests the owner for as long as he or she has an interest in the property; and the premium is paid only once, at closing.
- Title Insurance is different from other forms of insurance because it insures against events that occured before the policy is issued, as opposed to insuring against events in the future, as health, property or life insurance do. Title Insurance is loss prevention insurance.
- We rely on a search of existing records to identify possible defects in order to resolve them prior to issuing a policy. We perform intensive and expensive work up-front to minimize claims. The better we do this, the lower our number of claims.
- Researching titles may be extremely labor-intensive since only about 15 percent of public records are computerized. The industry invests a substantial amount of time and expense to collect and evaluate title records. As a result, the industry’s claims are low compared to other lines of insurance.
- Dollar-for-dollar, Title Insurance may be the best investment a property owner can make to protect their interest.
Share the Value
The CFPB believes the consumer should make a decision to obtain Owner’s Title Insurance coverage based on available information. So talk the talk. Tell your customers about the value of Title Insurance. Share with them these eight values. Direct them to the American Land Title Association website where they can learn more about the importance of an Owner’s Title Policy.