Michigan Joins Settlement Against Mortgage Servicer Over ‘Forced Place’ Insurance

The Michigan Department of Insurance and Financial Services (DIFS) joined 48 state financial regulatory agencies in reaching a $15.5 million settlement with mortgage servicer NewRez for improperly imposing “force-placed” insurance costs on borrowers who already had active homeowners insurance policies. Michigan’s final share will be $274,206. “Michiganders should be able to have confidence that their mortgage lenders and servicers operate with integrity and follow the law,” said Director Fox. “This settlement demonstrates DIFS’ commitment to holding licensees accountable and protecting Michiganders’ pocketbooks. If consumers notice suspicious activity or have concerns related to their insurance or financial services, they should contact DIFS online or by calling 877‑999‑6442, Monday through Friday from 8 a.m. to 5 p.m.” Under the terms of the settlement, Fort Washington, Penn.-based NewRez LLC, will pay a total of $15.5 million. The company worked with state regulators to self-identify and proactively remediate $4.5 million to the impacted borrowers, and it will pay an additional $11 million for costs and penalties. NewRez will be required to implement and conduct enhanced monitoring for loans that have force-placed insurance and must also implement other actions to strengthen controls. The settlement resolves an issue found in a multistate examination of NewRez that found the company had improperly imposed force-placed insurance on more than 4,200 borrowers nationwide who already had active homeowners insurance policies, causing consumer harm in the sum of $4.5 million. Force-placed insurance is often required when a homeowner’s policy is cancelled, delinquent, or is insufficient in coverage and the borrower has failed to secure replacement coverage. If necessary, the lender, bank, or loan servicer may force the replacement coverage, which allows the lender to protect its financial interest in the property. This practice usually is significantly more costly than if a consumer secures their own insurance policy. The District of Columbia led the enforcement team, with the assistance of Arkansas, Iowa, Massachusetts, and Montana. NewRez cooperated with the states in the settlement. Source: Michigan Department of Insurance and Financial Services Topics Michigan Was this article valuable? Thank you! Please tell us what we can do to improve this article. Thank you! % of people found this article valuable. Please tell us what you liked about it. Here are more articles you may enjoy.