§ 107.603. Advance of Credit for Life or Disability Insurance in Connection with Loans Made.

(a) An association may accept the assignment by a borrower of a policy of life insurance on the life of the borrower, or disability insurance on the borrower, as additional security for a loan made and may advance the insurance premiums on such assigned life or disability insurance and add the amounts thereof to the outstanding loan balance subject to the following conditions:

(1) The insurer of the borrower's life or disability policy agrees in writing with the association and insured that in the event of a foreclosure sale or acceptance of a deed in lieu of foreclosure, the insurer will immediately refund to the association the amount of unearned premium.

(2) The borrower shall repay to the association all advances of life or disability insurance premiums in monthly payments of at least one-twelfth of the amount advanced plus interest.

(b) These advances for insurance premiums may be considered as having been made pursuant to the provisions of California Financial Code Section 7650.

HISTORY

1. Change without regulatory effect renumbering former Section 241.3 to Section 107.603 (Register 87, No. 14). For prior history, see Register 74, No. 21.

2. Amendment of subsection (b) filed 2-18-88; operative 3-19-88 (Register 88, No. 10).

Note

Note: Authority cited: Section 8053, Financial Code. Reference: Section 7650, Financial Code.