Credit Life Financed on Home Loan, GMI Required?

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Question:

A home loan application was completed on a consumer loan refinance on their dwelling and Credit Life Insurance was financed on the loan. Is the government monitoring information required or prohibited on the home loan application? (Is a refinance with cash out (ie credit life insurance) or cash out for personal use, medical, etc., subject to government monitoring information?)

Answer:

For Reg B you only collect GMI for the purchase or refinancing of the purchase of the applicant's primary dwelling and the loan is to be secured by that dwelling. For Reg C GMI is required for all loan requests that meet the definition of a home purchase, home improvement or refinancing. In the matter of a refinancing the use of the new proceeds plays no part in whether the request meets the definition of a refinancing.

First published on BankersOnline.com 10/02/06