We believe it would be a best practice to estimate the cost of homeowners insurance on the GFE for a refinance, unless the bank has confirmed that the borrower already has a homeowners insurance policy in place. The GFE instructions simply require you to estimate the “total amount of the premiums for any hazard insurance policy,” without addressing a refinance situation (where a policy may already be in place). Appendix C to Part 1024. As you pointed out, HUD’s RESPA FAQs regarding refinances do address this, stating that if “the new lender is requiring the borrower to maintain the existing hazard and flood insurance policies on the home, Block 11 may be completed with $0.”

However, if you are not requiring the borrower to maintain existing insurance policies, and you do not have confirmation that insurance policies are in place and that the borrower has not allowed them to lapse, then it may be prudent to provide an estimate of the borrower’s insurance costs. Also, note that the CFPB now has rulemaking authority over the RESPA rules, and it has not formally adopted HUD’s preexisting FAQs or other forms of guidance.