Title insurance protects the lender and optionally the buyer against undiscovered title defects. Cost, who pays, and whether shopping is allowed vary by state and loan type. For MLOs, title insurance is a TRID-controlled fee with specific disclosure rules.
Lender's vs. Owner's Title Insurance
- ✦Lender's title insurance is required on every purchase and most refinances; it protects the lender for the loan amount only.
- ✦Owner's title insurance is optional for the buyer; it protects the full purchase price for as long as the buyer owns the property.
- ✦The CFPB strongly recommends owner's coverage; FHA does not require it but allows the seller to pay for it.
Who Pays and Regional Custom
In many parts of the country, the seller pays the owner's title policy and the buyer pays the lender's policy. In Florida and Texas, rates are state-regulated and posted publicly. In states where rates are negotiated, borrowers have the right to shop for their own title company within RESPA guidelines. Regional custom varies significantly and MLOs should know the practice in their local market.
TRID Disclosure Rules
Title fees are disclosed in the Services You Can Shop section of the Loan Estimate. If the borrower uses the lender's designated provider, the fee is protected at zero tolerance. If the borrower shops and selects an alternative provider, the fee is compared to the written estimate at settlement and a 10% aggregate tolerance applies. MLOs should provide the Written List of Service Providers at the time of the LE to ensure the borrower's ability to shop is properly documented.
Aria can explain title insurance disclosure rules, state-specific customs, and how to handle shopping situations within the TRID timeline. Ask at vicariointel.com.
7-day free trial. No credit card required.
Ask Aria About Title Insurance Costs and TRID Requirements →