In that second letter Mass Mutual advised petitioner that his policy was issued with an automatic premium loan provision.

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The letter further informed petitioner that when his policy no longer had enough value to support a loan to cover the premium obligation, the policy lapsed with a loan outstanding, creating taxable income to him that Mass Mutual was required to report to the Internal Revenue Service.

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Finally, you have to pay a premium of up to 1% of the loan amount at closing (it can be rolled into your mortgage but that would increase your monthly payments) and a monthly premium of up to .9% of the loan amount each year.

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That demand is precarious, and no firm will take a chance on increasing supply in such troubled times, when banks demand a premium to cover their large loan losses.

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An FHA insured loan would charge you a monthly insurance premium.

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Chris Samson of Deloitte Touche Tohmatsu, a consultancy, says that several lenders are actively looking at premium products that enable people to manage payments more flexibly over the lifetime of a loan and to release money against housing equity more easily.

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If a broker puts you into a sub prime loan and you're A credit, they receive what is called the yield spread premium, which also synonymous to a kick back.

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