Therefore, OCC regulations should prohibit the financing of lump-sum or single premium DCAs or DCCs on all consumer loans, including home loans. This action still would allow consumers to purchase the protection at reasonable cost on a monthly outstanding balance, but would prevent unscrupulous lenders from taking advantage of unwitting borrowers. CRL also believes that any regulation should not rely on disclosure of financed DCCs as a substitution for their prohibition. The North Carolina law deliberately does not impose or rely upon additional disclosures to consumers. The closing of a mortgage loan is already a blizzard of paperwork that is quickly pushed past the borrower.
Additional disclosures are just more snowflakes in the storm and provide no aid to consumers.
Moreover, disclosures become a refuge and defense for lenders who point to language in one of the literally dozens of documents signed by the borrower. For instance, even though the borrower may never be told about onerous provisions of the loan, such as an exorbitantly priced credit insurance policy or DCA, the terms are contrary to what the borrower reasonably expected, the lender will claim that the terms are permissible because they were disclosed somewhere in the many loan papers. Additionally, the OCC should require that DCAs must be closed after the loan is closed, not when the loan closes. This helps make clear to the borrower that the insurance or DCA is not required to close the loan, a pressure tactic often used by unscrupulous lenders. It shall also be unlawful for a lender to state or suggest that the availability of the loan to the borrower is contingent upon or affected by whether the borrower purchases a debt cancellation contract.