We currently force place for the remaining principal balance on the loan (except Freddie Mac loans which requires the higher of the unpaid balance or 80% of the replacement cost), we are wondering how others are determining the coverage on your portfolio loans. We are thinking about starting to force placing the same coverage amount on the policy being cancelled.

Based on recent lawsuits, I suggest force placing the minimum insurance required under your loan contract.

Many in the industry are recognizing that using the replacement cost value (RCV), as approximated by the coverage amount of the last known acceptable insurance policy obtained by the borrower (LKCA) is the appropriate method for determining the coverage amount for LPI.

Using some other method, such as the unpaid principal balance (UPB‖) or lesser of the UPB or LKCA would result in borrowers with inadequate coverage to repair their properties, leading to increased litigation risk to servicers and investors. Such method would also be inconsistent with states‘ position on appropriate coverage amounts.

Where did you copy those two paragraphs from??? If you go outside of the coverage required by your loan contract, you better be doing it with legal assistance.

The new RESPA servicing rules addressed "comparable coverage" as follows:

"After consideration of the comments received on the alternative, the Bureau believes that the alternative proposal’s requirement regarding comparable coverage would add unnecessary complexity to the regulation. Whether a borrower may or may not benefit from any particular coverage level is dependent on the individual circumstances of the borrower. Further, differences between coverage provided for homeowners’ insurance and force-placed insurance make a comparability determination and complex and difficult process. The Bureau declines to adopt the alternative proposal with respect to obtaining comparable coverage."

that was feedback I was provided by counsel. Thanks for your insight under RESPA. Lots of different and conflicting info out there!