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.McKenchnie emphasized that the requirement isn’t in the Dodd-Frank Act and could bring unintended market consequences that will harm consumers.
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.
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.