How is the seller credit applied to the owner’s title insurance policy when the LE/CD reflect the discounted amount rather than the higher amount that the title company is charging?
When lender’s and owner’s title insurance policies are issued simultaneously, the title company applies a discount to the lender’s policy, however the TRID Rule requires that discount to be applied to the owner’s policy because this fee is not required by the lender whereas the lender’s policy is, so the lender’s policy must be disclosed at the full cost. In situations where the seller is paying for the owner’s title insurance policy on the behalf of the borrower, the LE simply shows the seller credit amount in the“Seller Credits” line, however the problem arises on the CD where specific credits are allocated to the related fee and the owner’s policy is showing a discounted amount, so how is the seller’s contribution allocated at the correct, full amount? On the CD, the seller credit would be applied to the owner’s policy first, then the remainder applied to the lender’s policy. This allows the borrower to see the full seller contribution to the title costs.