An insurance brokerage is an affiliate of the bank. Borrowers are not required to purchase home insurance policy from the affiliate. If borrower opts to go through the affiliate to purchase their home insurance; the affiliate then remits the premium to an unaffiliated insurance company, but affiliate retains/earns a commission on each policy/premium. Is this a fee that falls under the Real estate-related fees (§ 1026.32(b)(1)(iii))? Will the premium have to be included in the points and fees calculation?

No, insurance is covered under .4(d) and not .4(c)(7)(iii)

just to confirm, so the home insurance premium (coverage against damage to the borrower's real property) does not need to be included when in the QM Points-and-Fees caps, even if borrower purchases through a bank's affiliate (who remits the premium to an unaffiliated insurance company, but retains/earns a commission on each policy/premium).

If the borrower shopped for the service, then unless someone can show me were it would be included within the regulation, I do not think it is.

Based on the following I think the portion of property insurance premiums retained by the creditor or an affiliate would be included unless I'm misinterpreting the meaning of credit property insurance.

1026.43

(3) Limits on points and fees for qualified mortgages. (i) Except as provided in paragraph (e)(3)(iii) of this section, a covered transaction is not a qualified mortgage unless the transaction's total points and fees, as defined in § 1026.32(b)(1), do not exceed:

1026.32

(b) Definitions. For purposes of this subpart, the following definitions apply:

(1) In connection with a closed-end credit transaction, points and fees means the following fees or charges that are known at or before consummation:

(i) All items included in the finance charge under § 1026.4(a) and (b), except that the following items are excluded:

(D) Any bona fide third-party charge not retained by the creditor, loan originator, or an affiliate of either, unless the charge is required to be included in points and fees under paragraph (b)(1)(i)(C), (iii), or (iv) of this section;

(iv) Premiums or other charges payable at or before consummation for any credit life, credit disability, credit unemployment, or credit property insurance, or any other life, accident, health, or loss-of-income insurance for which the creditor is a beneficiary, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract;

Dan, - Yes further clarification would help, if this is not a standard homeowner's insurance policy.

2. Credit property insurance. Credit property insurance includes insurance against loss of or damage to personal property, such as a houseboat or manufactured home. Credit property insurance covers the creditor's security interest in the property. Credit property insurance does not include homeowners' insurance, which, unlike credit property insurance, typically covers not only the dwelling but its contents and protects the consumer's interest in the property.

....Credit property insurance does not include homeowners' insurance,......

I think that statement pretty well clarifies homeowners insurance is not included in the credit property insurance category. I failed to look through the OSI before posting. Getting ready for a compliance & CRA exam so trying to multitask.