Texas Adopts Provisions Regarding Basic Manual for the Writing of Title Insurance
By Matthew Dailey, J.D.
July 27, 2015 The Texas Department of Insurance adopted amendments to the Basic Manual of Rules, Rates and Forms for the Writing of the Title Insurance in the State of Texas. The amendments create an addendum to the Closing Disclosure form under Regulation Z. These provisions are effective on August 1, 2015.
28 TAC Section 9.2
The Commissioner of Insurance adopted new 28 TAC s.9.2 which adopts a new procedural rule and form as amendments to the Basic Manual of Rules, Rates and Forms for the Writing of the Title Insurance in the State of Texas. The form is an addendum to the new TRID Closing Disclosure and is called the Texas Disclosure. Closing agents will now be required to use the Texas Disclosure in an effort to help consumers understand the costs involved with the closing. This new state disclosure gives clear and complete information regarding the costs of title insurance at the closing.
Some of the changes in the Closing Disclosure conflict with the practices in Texas. The federal TRID disclosures removed some items that were listed individually on the HUD. The Texas Disclosure requires real estate agent commissions to be listed however the Closing Disclosure does not. The Texas Disclosure also adds a signature line authorizing the settlement agent to disburse the funds.
In addition, the new state disclosure shows the actual price for title insurance in a transaction. In some states like Texas, companies offer discounts for simultaneous lender and owner policies in a transaction. However the new TRID instructions require the policy amounts to be listed in full with no discounts applied, causing the policy amounts to differ. This problem grows even larger when you add in the scenario of sellers paying for the owner’s policy. Because the Closing Disclosure requires the discount to apply to the owner’s policy rather than the lender’s policy the form does not show the true contribution. This also inflates the borrower’s cash-to-close figure in the Closing Disclosure.
Texas Insurance Code s.2502.051 and the Basic Manual prohibit rebates, discounts, and overcharges. These complete disclosures help consumers as well as TDI auditors who look at how agents comply with relevant state laws. With this Texas Disclosure agents can show that no rebates or overcharges occurred.
It is important to note that the Texas Disclosure will not replace the Closing Disclosure. It will merely supplement the Closing Disclosure in real estate transactions. The Texas Disclosure is a state document and not meant to function as a settlement statement. It does not include every fee but rather allows agents in Texas to adhere to state disclosure requirements. The hope is that it will also give clear explanations to everyone involved in the practice regarding the costs of a transaction.
*NOTE- TDI has changed the name of the field from “Property Address” to “Property” allowing property that does not have a numerical address like undeveloped land, to be listed by legal description.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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