We have a customer who is purchasing a home and wants to pay the insurance monthly. Is that allowable on a purchase? How would we show this on the CD? We generally show the annual premium.

It is totally up to the bank if they want to allow this or not. Show where on the CD? Prepaids? You show what they are paying for
at closing either up front or out of the closing proceeds.

I cannot imagine a lender that would allow a borrower in a purchase transaction to go totally monthly for hazard insurance. In other words, the lender needs to determine what is available (will an insurance agency write a policy that isn't prepaid for less than 6 months in your area?), then set up how much is going to have to be prepaid either in advance or from closing funds. Plug those amounts into the prepaid insurance portion of the CD either as paid before closing or at closing. But you will, I assume, want some prepaid coverage to be in effect starting with the closing date.

Monthly payments may suggest that escrowing is something to consider/offer.

I'll be perfectly honest here. Our insurance is shown POC. We have the declarations which always has an annual effective date from/to and an annual premium. How they set up payments with the insurance company is not something we get into...but I'm quite sure there is plenty of monthly/quarterly/semi annual plans out there in the portfolio. js.

Ditto Joker.

Opening this up again - so if a borrower opts for a monthly or quarterly insurance payment plan, how much do you disclose? Just the amounts due within 60 days of consummation?

You disclose whatever they paid for xx months of coverage whether that is one, three or twelve.

Gotcha. So if they opt for monthly pay, we only disclose that first month's payment even though a second payment will be due within 60 days of consummation, right?

You disclose what they either pay at closing or prepay prior to closing in order to close the loan. The 60 days really is a misnomer in that section of the regulation.

Thank you so much! Yeah the 60 days is confusing... reading back through it, it seems like it's just related to the property taxes.

But still, it would only apply if the consumer was required to pay for the property taxes at or prior to closing as a condition of receiving the loan.