Federal regulators are tightening the rules governing the small but highly profitable force-placed Homeowners’ insurance market.
Under the new rules promulgated by the Consumer Financial Protection Bureau (CFPB), mortgage servicers’ ability to impose force-placed coverage will be limited. Servicers will need to have a “reasonable basis” to prove that the borrower lacks necessary insurance before purchasing a new insurance policy.
If that “reasonable basis” is not provided then the servicer will have to terminate the new policy within 15 days and refund the insurance premium, says CFBP director Richard Cordray.
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