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I want to make sure I’m clear on what type of loan we can and cannot finance in single premium credit insurance. It sounds like if a loan is consumer purpose and is secured by ANY dwelling, regardless is principal dwelling or not, we will be prohibited from financing premiums. Is that correct?
You’re right. However, it only applies to HELOCs if they are secured by the principal dwelling. See 12 CFR 1026.36(b) below for the scope of 1026.36(i) Prohibition on Financing Single Premium Credit Insurance:
(b) Scope. Paragraph (c) of this section applies to closed-end consumer credit transactions secured by a consumer’s principal dwelling. Paragraphs (d), (e), (f), (g), (h), and (i) of this section apply to closed-end consumer credit transactions secured by a dwelling. This section does not apply to a home equity line of credit subject to § 1026.40, except that paragraphs (h) and (i) of this section apply to such credit when secured by the consumer’s principal dwelling. Paragraphs (d), (e), (f), (g), (h), and (i) of this section do not apply to a loan that is secured by a consumer’s interest in a timeshare plan described in 11 U.S.C. 101(53D).
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