Single Premium Credit Insurance

One of my co-workers mentioned he heard that the Dodd Frank Act would be eliminating Single Premium Credit Insurance (credit life, disability, etc.). He did not have any documentation on this however, and wanted me to verify this for him. I had scoured all the Dodd Frank materials I have and can not find any reference to this. Has anyone heard of this?

It's been awhile since I looked at this part of DF, but if memory serves, it's not that it is eliminated, but I thought that it could no longer be financed.

Don't quote me though... I would need to confirm.

Confirmed:

Creditors will no longer be able to finance (directly or indirectly) single premium credit insurance for any residential mortgage or open-end credit plan secured by the the consumer's principle dwelling.

Thank you

That said, they rule hasn't been written yet, so no need to change anything in the short term.

Do we know a compliance date for this yet? I thought I understood it to be effective 18 months after the transfer date which is July 21, 2011, however we received a notice from the credit life insurance company stating that it will be prohibited effective July 21, 2011. Does anyone have any information on this?

SINGLE PREMIUM CREDIT INSURANCE PROHIBITED.—No creditor may finance, directly or indirectly, in connection with any residential mortgage loan or with any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-of-income, life, or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that—


(1) insurance premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be considered financed by the creditor; and

(2) this subsection shall not apply to credit unemployment insurance for which the unemployment insurance premiums are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid pursuant to another insurance contract and not paid to an affiliate of the creditor.

REGULATIONS; EFFECTIVE DATE.—

(1) REGULATIONS.—The regulations required to be prescribed under this title or the amendments made by this title shall—

(A) be prescribed in final form before the end of the 18-month period beginning on the designated transfer date; and

(B) take effect not later than 12 months after the date of issuance of the regulations in final form.

So as of today, there is still no cut-off date for being able to finance single premium insurance? As far as I can find, the rules do not appear to be written yet. Correct?

Has this been finalized? Received a doc today that made it sound like it was already a done deal. I don't remember seeing anything yet.

Consider the source of the document. Who's it from?

Has this been finalized yet?

No. It's one of a host of things on the Bureau's plate with a deadline for a final rule of January 21, 2013.

Ok.....great...Thanks.....I can push that back a little.....

Well, it's part of MRAPLA, and the Bureau has said it intends to get proposed rules out by this summer (presumably so it can just barely squeak the final rule in by 1/21/13). Most of MRAPLA becomes effective without a final rule in place if the final rules aren't completed by 1/21/13.

Thank you John

OK - I'm in acronym overload. What does MRAPLA stand for?

Mortgage Reform and Anti-Predatory Lending Act (title XIV of DFA).

I eventually found it - isn't Google wonderful?

Thanks.

And soooooo, there is still no proposal out there yet from the CFPB?

Swiggles....the proposal "may" be out there, but it isn't final....At this point....I'm looking at only final effective date......

I think............

Management had asked if a proposed rule had been published and so I just wanted to make sure before I told them "no." I'm typically notified by email of proposed rules, but I couldn't find anything on this one.....just wanted to make sure I haven't missed something.

We would have included a notice of any such proposal in our Top Stories and morning Compliance Briefing. I can assure you that the proposal hasn't seen the light of day yet.

If you need a bit more comfort, you can always scrutinize the Bureau's Notice and Comment webpage at http://www.consumerfinance.gov/notice-and-comment/

I have not seen anything about this in any of the proposals. Does that mean it's effective 1/21/13 as written in DFA? Or do we think that the CFPB will be releasing something on this shortly?

I believe this is part of the Lender Compensation Revisions to Reg Z that they are hoping to finalize by 1/21/13.

A-Ha! There it is. Thank you!