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#2254046 - 05/18/21 04:51 PM Collateral Protection Insurance Question
Mel in WA Offline
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Joined: Mar 2013
Posts: 1,120
When a borrower is not providing collateral insurance and we are required to force place, the premium is added to the principal balance. This is clearly outlined in our Agreement to Provide Insurance. However, we have found mistakes during this process and the force-placed premium had to be reversed. I have concerns regarding consumer harm and UDAAP, since the borrower paid interest on the increased principal amount. Is it a standard practice to add force-placed premiums to the principal balance?

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#2254067 - 05/18/21 06:53 PM Re: Collateral Protection Insurance Question Mel in WA
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,216
Galveston, TX
If you do and you make a mistake, then the reversal transaction would be backdated to the original force placement and date and subsequent transaction would then be reapplied.
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#2262640 - 11/18/21 03:04 PM Re: Collateral Protection Insurance Question Mel in WA
Cbigun Offline
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Posts: 142
Is the "Agreement to provide insurance" a required document for HELOCs?

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#2262650 - 11/18/21 04:13 PM Re: Collateral Protection Insurance Question Mel in WA
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,216
Galveston, TX
What "Agreement to provide insurance" are you referring too? You mean to keep the property insured? That is a lender option and any specific disclosure would be a State law issue.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2262651 - 11/18/21 04:17 PM Re: Collateral Protection Insurance Question Mel in WA
Cbigun Offline
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Joined: May 2016
Posts: 142
Yes, it is a document provided by the software company. It is covered in the loan agreement so making the decision on whether it needed its own separate document. Thank you!
Last edited by Cbigun; 11/18/21 04:20 PM.
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