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New Regulations on Forced-Place Homeowners Proposed

The head of the Consumer Financial Protection Bureau will propose regulations this year imposing strict limits on use of force-placed insurance for homeowners
March 13, 2012

The head of the Consumer Financial Protection Bureau will propose regulations this year imposing strict limits on use of force-placed insurance for homeowners. The director of the new federal Consumer Financial Protection Bureau, Richard Cordray, says his agency will issue rules “to prevent (mortgage) servicers from charging for this product unless there is a reasonable basis to believe that borrowers have failed to maintain their own insurance.”

At the same time, the Federal National Mortgage Association (Fannie Mae) said it would solicit proposals from insurance companies seeking to compete for its force-placed business. Robert Hartwig, president and chief economist at the Insurance Information Institute, says that singling out the product is unfair. He says the problem is not with insurers, but lenders because each lender manages its own business relationship with force-placed insurance providers.

Read the entire article on proposed regulations for forced-place insurance: Forced-Place Insurance Rises on Fed’s Radar (National Underwriter 3/9/12)