One of the issues that we’ve struggled with in connection with the new Integrated Disclosures Rule is determining in which tolerance category to put property insurance premiums if the premium is paid to the creditor or an affiliate of the creditor. Is this zero tolerance or unlimited tolerance?
The rule generally requires charges paid to a creditor or its affiliate to be subject to a zero tolerance, while property insurance premiums are specifically designated as one of the charges that have unlimited tolerance. So, what about property insurance premiums paid to an affiliate?
Thanks to one of the listeners of our Forum who contacted the CFPB, we went back and reviewed the preamble, or supplementary information, provided with the Final Rule. It does state property insurance premiums are included in the category of settlement charges not subject to a tolerance, whether or not the insurance provider is a lender affiliate. While it’s not in the regulation itself, we do feel this should allow property insurance premiums an unlimited tolerance, regardless to whom they are paid to.
Diane joined Banker’s Compliance Consulting with over 10 years of compliance experience and over 15 years of experience within the financial industry. Diane is a Certified Regulatory Compliance Manager (CRCM) and has a Bachelor’s Degree in Sociology with a concentration in Criminal Justice. She is a graduate of the Schools of Banking Compliance School and has participated in various other training opportunities throughout her career. Diane understands firsthand the struggles banks face in building and maintaining successful compliance programs. Her experience and common sense approach to consumer compliance is a great asset to our clients.
Diane and her husband have two kids who keep them busy. She enjoys running and other sports and is a big Bugs Bunny fan! She’s a bit crazy in that she does enjoy reading some of these regulations and she’s a “crazy cat lady!” Her cat tales are hilarious!