A premium paid by a borrower for an insurance policy that insures continuance of mortgage payments in the event of a mortgagor’s disability or illness. These premiums may be collected as a part of a monthly mortgage payment and, if they are, they should be included as a cost on the Federal-in-Lending Disclosure Statement. On HUD-FHA and VA mortgages. however, failure to pay the premium cannot serve as a condition of default, so premiums should not be included as part of the mortgage payment or as obligations on the application for insurance or guaranty.
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