Hello all!

I have a quick question regarding how to handle the following situtation:

1. Loan is a refi with HOI currently in effect.
2. Loan closes on 5/15 and the first payment is due 7/1.
3. New HOI premium is payable 6/2020. The actual HOI premium amount will be unknown at the time of closing.

Would you:

1. Disclose estimated HOI under Section G? It doesn't seem as if this could truly be disclosed as a prepaid item as the premium is not being paid at close. My thought is to collect as escrow based on quote from carrier and disclose under Section G.

2. How would you handle the disclosure of the new HOI premium amount on Initial Escrow Account Statement as this amount is collected prior to the start of the computation period (in this case beginning on 7/1)?

Thank you!

Any amounts payable prior to the first payment is a prepaid. How can you not know the HOA dues?

My thought is to collect as escrow

This would not be allowable under RESPA since the premium is (will) be paid outside the escrow computation year which begins with the first scheduled payment.

Hello,

Thank you for the response.

The amount in question is actually for homeowner's/hazard insurance. The policy expires after closing but before first payment.

The question is how to handle the esimtated amount of the HOI premium on the LE/CD, and also on the initial escrow statement as the premium amount will fall outside of the computation period.

My understanding is that for it to be considered a prepaid charge- you would have to collect and pay prior to closing. Could you estimate the charge and include as a prepaid item?

Thanks again.

Thank you Dan. I appreciate your response.

Sorry that I misread HOI as HOA. Unless the payment of the insurance renewal was a specific condition of closing this refinance, then it really does not need to go on the closing disclosure. As far as the initial escrow disclosure, next year's premium would just appear in month 12 of the escrow analysis.