NY A10490

Mortgage servicers can only obtain force-placed insurance if they have reasonable basis to believe the borrower failed to maintain required hazard, flood, or homeowner's insurance.

Servicers must send two written notices by first-class mail (at least 30 days apart) to borrowers before obtaining force-placed insurance, and must wait 15 days after the second notice for borrower response.

Required written notices must inform borrowers of their obligation to maintain insurance, state the servicer lacks evidence of coverage, explain procedures to demonstrate existing coverage, and warn that the servicer may obtain coverage at the borrower's expense.

Servicers must terminate force-placed insurance and refund all premiums and fees within 15 days of receiving evidence of the borrower's existing insurance coverage.

Servicers cannot obtain force-placed insurance from affiliated entities, cannot split fees or accept referral fees in connection with force-placed insurance, and cannot require coverage exceeding the greater of the last known coverage amount or outstanding loan balance.