Lender placed or force placed insurance on home mortgages overview and oversight issues
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Lender placed or force placed insurance on home mortgages overview and oversight issues
Lender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issues-Placed or Force-Placed Insurance ... ISBN: 978-1-63484-737-7Editor: Debra I-ambert© 2016 Nova Science Publishers. Inc.Chapter ỈLender-Placed Insurance: More Robust Data Could Improve Oversight*United States Government Accountability OfficeWHY GAO Dll) THIS StudyMortgage servicers use lender-placed Lender placed or force placed insurance on home mortgages overview and oversight issuesinsurance 11.PI) to protect the collateral on mortgages when borrower-purchased homeowners or flood insurance coverage lapses. The 2007-2009 financialLender placed or force placed insurance on home mortgages overview and oversight issues
crisis resulted in an increased prevalence of LPI. Because I.PI premiums are generally higher than those for borrower-purchased coverage* slate insurLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issuesholder views on the cost of LPI: and (3) slate and federal oversight of LPI. GAO examined documentation, studies, and laws and regulations related to LP1. and interviewed stakeholders including Slate insurance and federal financial regulators, consumer advocates, insurers, servicers, and industry as Lender placed or force placed insurance on home mortgages overview and oversight issuessociations. GAO selected interviewees based on their involvement in the LP1 market and other factors to obtain a diverse range of perspectives. GAO seLender placed or force placed insurance on home mortgages overview and oversight issues
lected the sevenThis is an edited, reformatted and augmented version of a United States Government Accountability Office publication. No. GAO-15-631, Lender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issuespremium volume and involvement in the I.PI market.What GAO RecommendsGAO recommends that NAIC work with stale insurance regulators to collect sufficient, reliable data to oversee the LPI market. This includes working with state insurance regulators to develop and implement more robust policies and p Lender placed or force placed insurance on home mortgages overview and oversight issuesrocedures for LPI data collected annually from insurers and to complete efforts to obtain more detailed national data from insurers. NAIC said it woulLender placed or force placed insurance on home mortgages overview and oversight issues
d consider the recommendations as part of its ongoing work in the area.What GAO FoundMortgage servicers purchase lender-placed insurance (LPI) for morLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issuesnal insurer. The limited informalion available indicates that 1.PỈ generally affects 1 percent to 2 percent of all mortgaged properties annually and has become less prevalent since the 2007-2009 financial crisis as foreclosures have declined. Although used more often when borrowers without escrow ac Lender placed or force placed insurance on home mortgages overview and oversight issuescounts (about 25 percent to 40 percent of borrowers) stop paying their insurance premiums, servicers also use LP1 when an insurer declines to renew aLender placed or force placed insurance on home mortgages overview and oversight issues
policy. LP1 insurers often provide sen ices such as tracking properties to help servicers identify those without insurance and confirming coverage. LPLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issuesency Management Agency offers flood LPI. but industry officials said most servicers prefer private coverage because of more comprehensive coverage and lower rales, among Ollier things.LPI premium rates are higher than rates for borrower-purchased insurance, and stakeholders disagreed about whether t Lender placed or force placed insurance on home mortgages overview and oversight issueshe difference is justified. Insurers pointed out that they provide coverage for any property in a servicer's portfolio without a rigorous underwritingLender placed or force placed insurance on home mortgages overview and oversight issues
process, and the limited information requires higher rates. They added that LPI properties tended to have higherLender Placed Insurance3risk characteLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issueslators said that the factors dial insurers cite for higher rales, as well as the insurers’ limited loss histories, do not justify the magnitude of the premium differences. They also said borrowers have little influence over the price of LPI and that some insurers competed for the servicers' business Lender placed or force placed insurance on home mortgages overview and oversight issues by providing commissions to die servicer that passed the costs on to the borrower through higher premium rates. Insurers, however, said that LPI premLender placed or force placed insurance on home mortgages overview and oversight issues
ium rates were filed with and approved by state regulators and that commissions were a standard indusưy practice, but their use had decreased.State inLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issueshase LPI coverage for their portfolios. However, a lack of comprehensive data at the stale and national levels limits effective oversight of the LP1 industry. For example, regulators lack reliable data that would allow them to evaluate the cost of LPI or the appropriateness of its use. The National Lender placed or force placed insurance on home mortgages overview and oversight issuesAssociation OÍ Insurance Commissioners (NAIC), which helps coordinate Slate insurance regulation, requires insurers to annually submit state-level LP1Lender placed or force placed insurance on home mortgages overview and oversight issues
data, but the data were incomplete and unreliable. NAIC provides guidance for the reporting of these data and shares responsibility with slate regulaLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender- Lender placed or force placed insurance on home mortgages overview and oversight issuesral regulators have Cixirdinated lo collect more detailed national data to better understand the LP1 industry, but insurers failed io provide them all of the requested information, and whether and when they will is unknown. Without more comprehensive and reliable data, state and federal regulators l Lender placed or force placed insurance on home mortgages overview and oversight issuesack an important tool lo fully evaluate 1.P1 premium rates and industry practices and ensure that consumers arc adequately protected.AbbreviationsBiggLender placed or force placed insurance on home mortgages overview and oversight issues
ert-Waters ActCFPBCIEEDodd-Frank ActFCAFDICLender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender-Lender-Placed orForce-Placed Insuranceon Home MortgagesOverview and Oversight IssuesHousing Issues, Laws and ProgramsDebra LamEditorNovinkaIn: Lender-Gọi ngay
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