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Friday, January 18, 2013

ABIA: Reconsider Mortgage Servicing Rules’ Lender-Placed Insurance Provisions

ABA’s American Bankers Insurance Association subsidiary yesterday urged the CFPB to reconsider the mortgage servicing rules’ lender-placed insurance notice provisions that go beyond what the Dodd-Frank Act intended.

Kevin McKechnie, ABA SVP for the Office of Insurance Advocacy stated:
The notice provisions in the Dodd-Frank Act were meant to provide borrowers and servicers with a roadmap for avoiding foreclosure and the expense of having hazard insurance placed against their collateral.

Rather than defining this as a shared responsibility between borrowers and their bank, the CFPB has chosen to issue a mandate requiring servicers to advance a borrower’s homeowners insurance premium. This prohibits servicers from force-placing coverage as long as [they] can continue the borrower’s insurance policy.
McKenchnie emphasized that the requirement isn’t in the Dodd-Frank Act and could bring unintended market consequences that will harm consumers.
The rule was meant to provide help to borrowers experiencing hardship during the economic crisis, but instead it risks imposing greater borrowing costs on all mortgagors in the future.
Read McKechnie’s statement.

1 comment:

lilly martin said...
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