NAR Submits Comments on Lender Placed Insurance
FHFA published a notice in the Federal Register inviting input on planned restrictions to some forced-placed insurance practices by banks and servicers of GSE loans. In the notice, FHFA indicated that they would limit specific forced-placed practices due to concerns regarding conflict of interest between parties to the insurance agreement. FHFA specifically suggested two changes:
- Commission for placing forced-placed coverage or for maintaining coverage will be banned for any servicer of loans owned or guaranteed by the GSEs.
- Companies owned, affiliated, or controlled by servicers will also not be allowed to receive any payments for reinsurance activities.
NAR provided comments noting that lender place insurance premiums have been detrimental to distressed borrowers and that the agency should evaluate alternative options and work with loan servicers and consumer groups to adopt guidance that results in an affordable premium for the borrower.