[jmccord]

Is this an Application disclosure or a Closing Disclosure. Or are we required to give at both time. I have not been able to determine exactly when to deliver this disclosure. So I am not sure if we give it at application and again at closing. Also, will it need to be signed or just show that we delivered it to the borrower?

[jholzknecht]

KRS 304.12-150 requires every debtor, borrower, or purchaser of property with respect to which insurance of any kind is required in connection with a debt or loan on the property shall be informed by the creditor or lender of his or her right of free choice in the selection of the agent and insurer through or by which such insurance is to be placed. There shall be no interference either directly or indirectly with the borrower’s, debtor’s, or purchaser’s free choice of an agent and of an insurer, the creditor or lender shall not collect a separate charge for the handling of insurance required in connection with a loan or extension of credit based on the consumer’s choice of agent or insurer, and the creditor or lender shall not refuse an adequate policy so tendered by the borrower, debtor, or purchaser. Upon notice of any refusal of an adequate policy, the commissioner shall order the creditor or lender to accept the tendered policy, if he or she determines that such refusal is not in accordance with the requirements set out in subsection (2) of KRS 304.12-140. Failure to comply with the order of the commissioner shall be deemed a violation of this section.

Subsection 2 of KRS 304.12-140 states, “This section shall not prevent the reasonable exercise by any vendor or lender of its right to approve or disapprove the insurer selected to underwrite the insurance, and to determine the adequacy of the insurance offered.

The Kentucky statutes don’t specify a delivery time. However we encourage you to provide the notice at the time of application. if the disclosure is delivered at consummations it makes it difficult to argue that you didn’t interfere with the borrower’s free choice. Some lenders deliver the notice at application and at closing due the lack of clarity in the regulation.

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