Well, your president could be wrong. It would depend on whether the insurance company met the definition of a creditor under Reg Z. How many of these loans did the insurance company do a year. If they extended credit more than 5 times for transactions secured by a dwelling in the current or preceding calendar year, they would be a creditor and subject to Regulation Z (See 12 CFR 226.2(a)(17)). There are few exemptions from Regulation Z, no matter who you are, if you qualify as a creditor under the definition. You cannot correct this by making disclosures at the time of the loan sale.
You also have to ask yourself if they failed the basics of Reg Z, what other problems are there with these loans - RESPA disclosures, Flood, escrow accounting, high cost mortgages, rescission, etc.
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