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We had an audit recently and were given an errors on some of our loans because we did not disclose (optional) owner’s title insurance.
On the loans that we were given the errors they were not purchases. On each of the loans the property was already owned by the borrower.
The bank does not required the borrower to purchase owner’s title insurance.
Please help me out.
I have to respond the auditors soon.
Thank you very much
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I believe what they are basing this on is 37(g)(4) and its commentary, which requires “amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay…” to be disclosed on the LE. If this is a fee that you know the customer will pay or if it is a fee that is customary in your area for non-purchase loans then I would say they are correct.
P. 233 and 234 of the final rule discusses owner’s title. https://www.govinfo.gov/content/pkg/FR-2013-12-31/pdf/2013-28210.pdf
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