How To Handle Proper Disclosure of the Texas Title Insurance Premium and Other Title Fees on the New Good Faith Estimate

The lender‘s Texas title insurance premium is part of the new GFE’s Block 4—Title services and lender‘s title insurance. The difference between the new and old GFE is that the new GFE requires the mortgage originator to lump in the Texas title insurance premium along with any fees for title searches, examinations, endorsements and all charges associated with the title services and settlement (closing) agent services as one single cost, whereas the old GFE required an itemization of all of these fees.

Within this lump sum cost, a mortgage originator should include the Texas title company’s delivery fees, notary fees and settlement fees since these fees are included in the definition of title services. The term “title services” is defined to include any service involved in the preparation and issuance of the title insurance policies. See 24 C.F.R. § 3500.2.

It is common practice for the title company to charge both the borrower and seller a fee for conducting the settlement. Only the charge to the borrower must be included in the total for Block 4 of the GFE. Charges that the seller pays as a matter of common practice and experience are not disclosed on the GFE.

However, the owner’s Texas title insurance and recording fees to the county will still be listed separately from the “Title services and lender‘s title insurance” lump sum cost.

Is this simpler for the borrower to understand than the way in which the old GFE addressed title fees? There is an argument that it makes Texas title insurance fees more opaque to the borrower. Come January 2010, these arguments will not necessarily matter anymore because the new GFE will be the mandated method of disclosure.