Lender placed insurance, also known as force-placed insurance, comes into play when a homeowner’s insurance policy lapses or is deemed insufficient. In these situations, the lender steps in and purchases a policy to protect their interest in the property. While this type of coverage safeguards the lender, it typically offers limited protection for the borrower.
In episode two of The Subservicing Scene, Richey May’s Mignonne Davis and Jenifer Hughes break down the essentials of lender-placed insurance and what servicers need to keep in mind to stay compliant with CFPB regulations. They cover:
- Key CFPB requirements around notification timelines and borrower communication
- Steps servicers must take before placing a policy
- Cancellation and refund procedures when borrowers provide proof of coverage
- How vendors can streamline the monitoring and notification process
