1-800-MINITER  
  
Loading
  		Login

 Compliance Watch:  FDIC, FEMA, Dodd-Frank, CFPB, RESPA, TILA

Supplying collateral risk transfer solutions for the lending community has come under intense scrutiny since the Dodd-Frank Bill was passed in 2010.  Almost daily, we hear news about class action lawsuits, Attorneys General investigations, state level hearings, and Fannie Mae initiatives. All of this while we are implementing the New RESPA Mortgage Servicing regulation designed by the CFPB.

Register for our Compliance Webinar
Thursday June 20th at 2pm EDT

The information below is a chronological listing of major legal and regulatory actions surrounding force-placed insurance.

May 2013

April 2013

  • The CFPB takes action against mortgage insurers to end kickbacks to lenders – The CFPB announced four enforcement actions to end what the Bureau believes to be improper kickbacks paid by mortgage insurers to mortgage lenders in exchange for business. The CFPB filed complaints and proposed consent orders against four national mortgage insurance companies in order to stop these practices, which have been prevalent for more than 10 years. The proposed orders require the four mortgage insurers to pay more than $15 million in penalties to the CFPB. Learn More

March 2013

January 2013

December 2012

August 2012

  • CFPB – Released both the TILA and RESPA Mortgage Servicing Proposals that were put out for public comment.  The RESPA proposal details the implementation of the Dodd-Frank Section 1463 force-placed insurance requirement including Notification Form Letters and handling escrow insurance payments for a delinquent borrower.  The TILA proposal does not detail force-placed insurance other than referring to Dodd-Frank. Learn More

July 2012

June 2012

  • NY DFS Demands Lower Force-Placed Insurance Rates – The result of the May Hearings is that insurance companies providing force-placed insurance products in New York had until July 6th to resubmit rates for NY DFS approval.  Companies included Assurant, the QBE Insurance Group and American Modern Home Insurance.  These companies make up more than 90 percent of the force-placed insurance market in New York.  "The more attention paid to the force-placed insurance issue the better," says Benjamin Lawsky, the Superintendent of New York's Department of Financial Services. "Our hearings made clear there is a need for fundamental reform." Learn More 

May 2012

  • NY DFS Holds Hearing on Force-Placed Insurance – 5 bank owned insurance agencies, Assurant, QBE, Bank of America, GMAC Mortgage and other servicing companies testified at the NY Department of Financial Services public hearings on force-placed insurance held May 17-21 in New York. Learn More 
  • Fannie Mae postpones implementation of SVC-2012-04 - On May 23rd, Fannie Mae released a servicing notice to postpone the implementation of the “Updates to Lender-Placed Insurance and Hazard Insurance Claims Processing originally released in March.  Fannie Mae “encouraged servicers to implement as many of the requirements as practically feasible”. Learn More 

March 2012

  • CFPB - announced that it will issue mortgage servicing rules that will impose new limits on force-placed insurance.  The announcement was made by Richard Cordray at a speech to the National Association of Attorneys General in Washington. Learn More 
  • RFP for force-placed insurance – On March 6th, Fannie Mae issued an RFP to major force-placed insurance carriers in an attempt to lower the cost of premiums to the Fannie Mae borrowers and investors.  The goal of the RFP is to:
    • Eliminate servicers from passing on commissions and service fees to Fannie Mae.
    • Eliminate servicers from passing on the cost of insurance tracking.
    • Separate commissions and fees to ensure transparency.
    • Fannie Mae releases Servicing Guide Announcement SVC-2012-04 – On March 14th, Fannie Mae released an update to amend and clarify servicing requirements related to Lender-Placed Insurance.  This announcement addressed the following issues which needed to be implemented by June 1, 2012:
      • Force placing insurance on delinquent accounts prior to and past 120 days.
      • Deductible amounts based on loan balance.
      • Borrower written communications (similar to Dodd-Frank)
      • Insurance carriers must be filed and approved in states where loans are serviced.
      • Borrower refunds must be processed within 15 days.
      • Servicers will no longer be reimbursed for tracking expenses.
      • No co-insurance clauses.
               Learn More 

February 2012
  • Banks Agree to $25B Robo-Signing Settlement – 5 banks agree to the largest joint state-federal settlement in history.  The 5 banks include: Bank of America ($11.8B), JPMorgan Chase ($5.29B), Wells Fargo ($5.35B), Citigroup ($2.2B), Ally Financial ($310M).  The significance of this settlement is that Section III E provides guidance for force-placed insurance.  This guidance is very similar to the Dodd-Frank guidance discussed above with the addition of a requirement to offer Insurance escrow services to the borrower as part of the initial written notice. Learn More 
  • Wells Fargo – QBE Insurance Class Action Lawsuit – According to the Harke Clasby & Bushman LLP website, the class action lawsuit alleges Wells Fargo and QBE Insurance conspired to inflate and profit from force-placed insurance when issuing more than 20,000 policies in Florida from 2009 to 2011. Learn More 

2011

2010
  • Dodd-Frank - Section 1463 of Dodd-Frank modifies the Real Estate Settlement Procedures Act of 1974 to include 3 new sub sections under Section 6 to oversee force-placed insurance.  The Dodd-Frank bill enables the attorney generals (AG’s), and later the CFPB to have oversight of force-placed insurance. Learn More
  • Florida Lawsuits – A number of lawsuits were filed by individual borrowers where servicers had force-placed insurance on their properties.  Allegations include excessive rates, placement of redundant coverage, and coverage for perils not required in the loan documentation.  One case I looked into had rates that were more than 3 times higher than the highest rate our company can charge in Florida. Learn More 
  • California Class Action Lawsuit – (Hofstetter v. Chase Home Finance, LLC) which challenges the practice to force place flood insurance on HELOCS with a zero loan balance.  The court issued an order allowing class action status in March of 2011. Learn More 

 
 

We will periodically send you invites to significant updates when they become available.  For example, we will be waiting to see the results of the NAIC meeting on force-placed insurance being held in August.  If anything of significance comes from that meeting, we will summarize it as well as provide links to more detailed information.