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NCUA Recommends Against End-of-Loan "Stacked" CPI Premium Payments



By Trace Ledbetter, SVP of State National Companies

Collateral Protection Insurance (CPI) is designed to help credit unions reduce their lending risk by safeguarding them against loan losses due to uninsured physical damage. Some CPI providers and agents believe it is easier to add premiums to the end of borrowers’ loans, rather than re-amortizing loans to spread out premium payment during the loan term (or over the term of the CPI certificate). However, this practice of “stacking” premiums conflicts with best practices recommended by industry regulators.

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