Endorsement Fees: To Include or Not to Include?

As title professionals handling closings become more familiar with the CFPB’s integrated mortgage disclosure forms, some questions have come up regarding disclosing endorsement charges. Since the final rule does not address endorsement charges and only speaks to disclosing the policy premium, there is no specific guidance as to how to disclose endorsements.

In following with the spirit of the rule, which promotes accurate disclosures to prevent any consumer confusion, it is best to disclose any endorsement fees separately on the disclosure forms. This approach applies to endorsement fees included in the lender’s premium as well as in the owner’s title policy calculation. 

Endorsement fees should not be included in any policy premium disclosure computations to avoid consumer confusion as to the costs of their policies. Listing the endorsement fees separately from premium disclosures will better ensure that the consumer fully understands the closing transaction. Keep in mind that if the endorsement is wrapped into an enhanced policy you do not need to show the endorsement separately.

As a reminder, title fees will need to be structured this way on the Loan Estimate and Closing Disclosure: “Title – [description of fee]”.

As an example, an endorsement for the lenders policy--such as the PUD endorsement--would go under services you did or did not shop for depending on where the other title fees are appropriately disclosed:

 

 

Comments

[Marty]

Regarding itemization of endorsement fee within Services Borrower Did Not Shop For, it appears line limitation will play a major factor. If a settlement fee, lender policy, CPL, deed preparation, and a few endorsements would cause issues.

[ALTA Blog]

The TRID rule provides flexibility for cost buckets to expand and contract as needed. It also allows for the use of additional pages to ensure all itemized cost items are disclosed. See 1026.38(t)(5)(iv).

One of the underlying principles around TRID is the forms are meant to be dynamic and flexible to fit the specific transaction. In the instance where one cost bucket will exceed the default number of lines, lenders can delete unused lines from other sections and add those extra lines to the section needing more space. If after borrowing lines form other sections, there is still the need for more line items, the rule allows the lender to split the closing cost details into two pages, a “loan costs” page and an “other costs” page.