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PMI at Closing - Prepaid FC?

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Is mortgage protection insurance that is paid into an escrow account at closing considered a prepaid finance charge for calculating the APR?

Yes. The Official Staff Commentary to 226.18(c)(10)(iv)(2) states:

Prepaid mortgage insurance premiums. RESPA requires creditors to give consumers a settlement statement disclosing the costs associated with mortgage loan transactions. Included on the settlement statement are mortgage insurance premiums collected at settlement, which are prepaid finance charges. In calculating the total amount of prepaid finance charges, creditors should use the amount for mortgage insurance listed on the line for mortgage insurance on the settlement statement (line 1002 on HUD-1 or HUD-1A), without adjustment (emphasis mine), even if the actual amount collected at settlement may vary because of RESPA's escrow accounting rules. Figures for mortgage insurance disclosed in conformance with RESPA shall be deemed to be accurate for purposes of Regulation Z.

First published on 2/21/05

First published on 02/21/2005

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