Disclosure Only Required if Insurance is a Loan Condition
Borrowers brought a putative class action against a mortgagee (lender) for allegedly failing to make the required lender-paid mortgage insurance (“LPMI”) disclosures under the Homeowners Protection Act. LPMI disclosures under the Act are only required if LPMI is a condition of the borrower obtaining the loan at the time of closing. Here the lender did not condition the loans to the plaintiff borrowers on obtaining LPMI at the time of closing. Rather, the lender began purchasing LPMI after the loans had closed in order to make the loans more marketable on the secondary market. The court reasoned the evidence demonstrated the lender’s purchase of LPMI post-closing did not adversely affect the plaintiffs’ loans or any other loans.