Federal regulators are tightening the rules governing the smallbut highly profitable force-placed Homeowners’ insurancemarket.
|Under the new rules promulgated by the Consumer FinancialProtection Bureau (CFPB), mortgage servicers’ ability to imposeforce-placed coverage will be limited. Servicers will need to havea “reasonable basis” to prove that the borrower lacks necessaryinsurance before purchasing a new insurance policy.
|If that “reasonable basis” is not provided then the servicerwill have to terminate the new policy within 15 days and refund theinsurance premium, says CFBP director Richard Cordray.
|Assurant, the largest player in force-placed insurance, says itwill comply with the new regulations. But the Office of InsuranceAdvocacy at the American Bankers Association is pushing back,saying the new CFPB regulations exceed the mandate provided throughDodd-Frank, which authorized the creation of the agency.
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