We have always disclosed an estimated home owners insurance amount on the Loan Estimate. If we know it is already paid on a refi loan do we have to disclose the amount. It reflects on the cash to close table and the loan officers are complaining the customers are always wanting to know why it is added in the cash to close if it is already paid.

I have the understanding that it is a cost of the loan and we have to disclose it??

Most lenders assume on a refinance that the homeowner already has insurance, which is not the case on a purchase transaction. Therefor, it is not included on the LE, using the good faith and customary charges premise. If down the road the lender learns that the customer does not have homeowner's insurance or that a current payment is due at closing, the lender can add that on the next disclosure issued.

Prepaids, other than odd-days interest, should only be on the loan estimate if the lender believes the money will have to be paid at or before closing.