On a purchase - prepaid homeowner's insurance would always be on the initial LE - would it not? Unless you make purchase money loans and do not require that the buyer buy homeowner's insurance before or at closing.

On a refinance, typically you would not automatically assume that their insurance was currently due or that they did not have any homeowner's insurance. As such, when you gain knowledge that it is going to have to be paid through the loan closing funds, it would be added to the next disclosure issued - whether initial, informational, or changed circumstance.

thank you!!

I'm sorry, one clarification needed - when you say it would be added to the next disclosure issued, if that just happens to be the Closing Disclosure (because there was no changed circumstance to support a revised LE), is disclosure on the CD (3 days before closing) sufficient to be able to pass the fee along to the borrower? it would not be zero tolerance at this point, correct? Thanks again!!

That would be correct. It is not a changed circumstance. But to maintain meeting the good faith disclosure requirements, you would have to include it on the next disclosure issued, whether that was a CD or not.

Thank you!!