In the state of Texas, when a Loan Policy is issued on a loan that fully takes up, renews, extends, or satisfies one or more existing liens that are already insured by one or more existing Loan Policies, the new Loan Policy must be in the amount of the note of the new loan. The premium for the new Loan Policy is reduced by a credit. According to the Texas Basic Manual of Title Insurance, Section III, R-8, the aforementioned credit is calculated using several inputs including the date of closing, prior policy age, and insured mortgage payoff amount.
The R-8 credit is calculated by applying a discount to the insured mortgage payoff amount (up to the original loan amount) dependent on the age of the policy. For policies 4 or less years old, the policy discount applied to the insured mortgage payoff amount is 50%. Where the prior policy is between 4 and 8 years old, the discount to the rate is 25%.
When quoting fees in LodeStar, the Texas R-8 is included in the Section C in the "Lender's Title Policy." The amount will vary based on the age of the policy and the discount applied per the insured mortgage payoff percentage. Here are a few examples.
A 2-year-old-policy with no insured mortgage payoff amount:
A 2-year-old-policy, $200k original mortgage, with $100k mortgage payoff amount:
A 2-year-old-policy, $200k original mortgage, with $200k mortgage payoff amount:
A 4-year-old-policy, $200k original mortgage, with $200k mortgage payoff amount:
For more information, please consult: