Q: I understand that we’re no longer allowed to finance credit insurance premiums on dwelling-secured loans. Does this prohibition apply to other types of loans, such as auto loans or unsecured credit?
A: No. Regulation Z Section 1026.36(i)—prohibition on financing credit insurance— generally prohibits a creditor from financing premiums or fees for credit insurance in connection with a closed-end consumer credit transaction secured by a dwelling, or an extension of open-end consumer credit secured by the consumer’s principal dwelling (i.e., HELOCs).
The prohibition applies to credit life, credit disability, credit unemployment, credit property insurance, and other similar products, including debt cancellation and debt suspension contracts.
Therefore, the prohibition does not apply to other types of loans such as automobile loans because they generally aren’t secured by a dwelling.
Visit CUNA’s compliance blog— “CompBlog”—for insight on topical issues. Email firstname.lastname@example.org with questions or ideas, and keep the conversation going with your peers on COBWEB—CUNA’s compliance listserv.