In the last CUG session, we discussed the prohibition of financing any premiums for fees for credit insurance in connection with a consumer credit transaction secured by a dwelling. The definition of credit insurance included, in part, “credit property insurance.” Jack, does the definition only include credit insurance if it is specifically for the purpose or any debt cancellation or suspension agreement? I want to ensure that forced placed hazard insurance or flood insurance is not applicable in this TILA provision since many banks may finance this type of insurance if adding to the loan balance. Thank you for your clarification.
The definition of “credit insurance” does not appear to include force-placed property insurance. The Commentary explains the concept of credit insurance by stating the such insurance “generally insures the consumer in the event of a specific event and the benefit is to make the consumer’s periodic payment.”