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#1999206 - 03/02/15 06:20 PM Force-Placed Ins. renewal w/ increased coverage
needHELP! Offline
Junior Member
Joined: Jan 2013
Posts: 44
We have a loan that has had force placed hazard insurance for several years. We sent the borrower the required notice 45 days prior to charging them the premium for the renewed force place policy. Now, a couple of months later, the loan officer has decided that he wants to increase the hazard policy to be $31,000 (which is the loan balance) instead of the $25,000 policy that's been in place for several years. I'm not sure why $25,000 was originally force placed. But, my question is - before we charge the borrower for the increased portion of the policy premium, do we need to send out the first and second notice that are required prior to charging a customer on a new force placed hazard policy? Or would we be ok because the notice that was mailed 45 days prior to renewing the $25,000 policy stated a premium estimate?

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#1999353 - 03/03/15 02:09 PM Re: Force-Placed Ins. renewal w/ increased coverage needHELP!
Jade'sFire Offline
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Jade'sFire
Joined: Apr 2012
Posts: 369
Yaven IV
If you choose to increase coverage; you would need to send out the initial and reminder notice. The increased policy will most likely cost more and the customer needs to be made aware and given the chance to acquire their own insurance policy.

Also, the new mortgage servicing proposal will amend the notices to include insufficient coverage. I guess they realized the notices did not cover this issue.
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#1999362 - 03/03/15 02:30 PM Re: Force-Placed Ins. renewal w/ increased coverage needHELP!
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,455
Bloomington, IN
the loan officer has decided that he wants to increase the hazard policy to be $31,000

Why all of a sudden isn't $25,000 sufficient? What authority does the loan officer have to require the increased coverage under your force place procedures? Does the specific property being insured have an insurable value of $31,000? What documentation was presented to support the $31,000 request?

I would want answers to all of these before I restarted the notification procedures and arbitrarily increased the coverage when as you said the loan officer has been satisfied with the lower coverage for a number of years. What has changed to warrant this increase?
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1999583 - 03/03/15 09:14 PM Re: Force-Placed Ins. renewal w/ increased coverage Dan Persfull
pjs Offline
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pjs
Joined: Aug 2004
Posts: 10,319
oHiO
I have a question concerning hazard force placed- the bank went with a new force placed company and the borrower was charged a premium by the new company. I believe the required 2 letters should have gone out to the borrower before the bank charged the premium- is this correct? Thanks for your time.

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