The US Department of Housing and Urban Development (HUD) has issued draft changes to the Servicing section of the future Federal Housing Administration (FHA) Single Family Housing Policy Handbook (SF Handbook).
Included in the proposed changes is a rule restricting the ability of a servicer to place coverage in amounts sufficient to guarantee full repair of a consumer’s collateral after total loss, opting instead to require coverage sufficient only to satisfy the consumer’s debt obligation against collateral.
From the HUD proposal:
The mortgagee may force place insurance where consistent with federal regulations, including RESPA regulations on force place insurance, if Borrowers fail to renew hazard insurance coverage when required. The mortgagee may not obtain more coverage than is necessary to protect the mortgagee’s interest.”
ABIA is concerned that this new standard will not adequately protect consumer interests after a loss event, and will include in our comment letter that we believe a more consumer-focused standard would protect a consumer’s home, equity and future. Comments are due November 14, 2014.
Learn more from HUD.
See a summary of proposed changes.