Integrated Disclosures: Homeowner’s Insurance Paid to an Affiliate

One of the issues that we’ve struggled with in connection with the new Integrated Disclosures Rule is Diane11determining 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 Dean

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