Premium Pricing

Lenders are cautioned about using premium financing on a consistent basis with an actual or implied promise for refinancing at a lower rate. Premium rate financing must be disclosed on the HUD-1 Settlement Statement and the Good Faith Estimate (GFE). The HUD-1 Settlement Statement and GFE must specifically itemize charges being paid on the borrower’s behalf; disclosing only a lump sum is not acceptable. Premium pricing is to be used for MORTGAGE FINANCING, closing costs and/or prepaid items only. It is not to be used for payment of debts, collection accounts, and judgments.

Please see: HUD Handbook 4155.1, REV-4, CHG-1, Paragraph 1-9a and Mortgagee Letters 94-07, 97-26 and 98-01.