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Friday, January 18, 2013

CFPB Mortgage Servicing Final Rules: Lender-Placed Insurance

On January 17, 2013, the CFPB issued its mortgage servicing final rules, which includes new requirements for lender-placed insurance (LPI). Those LPI requirements include: the servicer notify a borrower twice before charging the borrower for LPI; the second notices must provide the borrower with a good-faith estimate of how much the LPI cost; the servicer must terminate the LPI within 15 days of receiving evidence that the borrower has the necessary insurance and refund the LPI premiums for any overlapping coverage; and if a borrower has an escrow account, the servicer must continue the borrower’s insurance, even if the servicer needs to advance funds to the borrower’s escrow account.

Summary of the CFPB Rules

Fact Sheet on the Rules

Final Rule