Answer by Andy Zavoina: Vendors single interest insurance would be regulated at the state level because it is an insurance product. RESPA prohibits up-charging, but I am aware of no similar rule on loans such as you mention at the federal level. The fee could be challenged and you would have to substantiate why it is being charged. There should be some justification that applies to just these accounts and fees. The need for additional income would not be sufficient.
Answer by Dan Persfull: Any amount the bank charged in excess of the actual premium would also be a pre-paid finance charge.
First published on BankersOnline.com 6/23/08