Protection from surprise "force-placed" insurance charges
12 C.F.R. § 1024.37(b)
In plain words
If your servicer thinks your homeowner's insurance lapsed, it cannot just buy expensive insurance and charge you. It must send you a first notice at least 45 days before charging, and a reminder at least 15 days before charging. If you show you had insurance, it must cancel the forced policy and refund the overlap within 15 days.
Who is protected
Borrowers whose mortgage requires hazard insurance.
When it applies
- Covers most first and second mortgages on a home. It does not cover home-equity lines of credit (HELOCs).
- Flood insurance required by federal flood law follows its own rules.
What you can do
Send proof of your insurance
Send the servicer your declarations page or a letter from your insurer showing continuous coverage. Keep proof of when you sent it.
Deadline: As soon as you get a force-placed insurance notice; the servicer must cancel and refund within 15 days of getting your proof.
Dispute a wrong charge as a servicing error
If the servicer charged you anyway, send a notice of error asking it to remove the charge and refund it.
Open the tool
Honest limits
- If your insurance really lapsed, the servicer may buy coverage and charge you for it, after the notices. That coverage usually protects the lender, not your belongings.
- This is general legal information, not legal advice, and it does not promise any result. A HUD-approved housing counselor or a lawyer can look at your facts.
The law
- Federal regulationRegulation X — reasonable basis required
12 C.F.R. § 1024.37(b)
Exact part: (b)
What it says: A servicer may not charge for force-placed insurance unless it has a reasonable basis to believe you failed to keep the required insurance.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.37#p-1024.37(b) - Federal regulationRegulation X — 45-day and 15-day notices
12 C.F.R. § 1024.37(c)(1)
Exact part: (c)(1)
What it says: Before charging, the servicer must send a written notice at least 45 days ahead and a reminder notice, then wait 15 days.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.37#p-1024.37(c)(1) - Federal regulationRegulation X — cancel and refund
12 C.F.R. § 1024.37(g)
Exact part: (g)
What it says: Within 15 days of receiving proof of coverage, the servicer must cancel the forced policy and refund premiums for the overlap.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.37#p-1024.37(g) - Federal regulationRegulation X — charges must be bona fide and reasonable
12 C.F.R. § 1024.37(h)
Exact part: (h)
What it says: Force-placed insurance charges must be bona fide and reasonable.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.37#p-1024.37(h) - Federal lawRESPA — force-placed insurance
12 U.S.C. § 2605(k)(1)(A)
Exact part: (k)(1)(A)
What it says: A servicer may not obtain force-placed hazard insurance without a reasonable basis to believe the borrower failed to keep required insurance.
Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2605&num=0&edition=prelim
Court cases
- Homeowner wonSame topicRenfroe v. Nationstar Mortgage, LLC
Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241 (11th Cir. 2016)
a servicer that answers a borrower's written request without a reasonable investigation may be liable under RESPA when the borrower alleges resulting damages
- Homeowner wonSame topicJesinoski v. Countrywide Home Loans, Inc.
Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015)
a borrower exercises the Truth in Lending right to rescind by notifying the lender in writing within three years, without needing to sue within that period
- Homeowner wonSame topicMarais v. Chase Home Finance LLC
Marais v. Chase Home Fin. LLC, 736 F.3d 711 (6th Cir. 2013)
a borrower who alleges actual damages, such as added interest, caused by a servicer's deficient response to a qualified written request states a RESPA claim
- Homeowner lostSame topicLage v. Ocwen Loan Servicing LLC
Lage v. Ocwen Loan Servicing LLC, 839 F.3d 1003 (11th Cir. 2016)
a servicer's duty to evaluate a loss-mitigation application depends on its being submitted more than 37 days before the sale date scheduled at that time
- Homeowner lostSame topicGresham v. Wells Fargo Bank, N.A.
Gresham v. Wells Fargo Bank, N.A., 642 F. App'x 355 (5th Cir. 2016) (per curiam) (unpublished)
the federal dual-tracking bar applies only when the servicer receives a complete loss-mitigation application more than 37 days before the foreclosure sale
- Homeowner lostSame topicWhittier v. Ocwen Loan Servicing, L.L.C.
Whittier v. Ocwen Loan Servicing, L.L.C., 594 F. App'x 833 (5th Cir. 2014) (per curiam) (unpublished)
a RESPA claim against a servicer fails without evidence of actual damages caused by the violation
Related rights
Fair handling of your escrow account
12 C.F.R. § 1024.17(c)(1)
If your servicer collects money for taxes and insurance (escrow), it must pay those bills on time as long as you are not more than 30 days behind. It must review the account every year and send you a statement. It cannot keep more than a small cushion (one-sixth of a year's payments), and it must refund a surplus of $50 or more within 30 days of the review. When you pay off the loan, it must return what is left within 20 business days.
Read this rightMake your servicer fix mistakes (notice of error)
12 C.F.R. § 1024.35(a)
If your mortgage servicer made a mistake — like not crediting a payment, charging a wrong fee, or giving a wrong payoff amount — you can send a written "notice of error." The servicer must confirm it got your letter within 5 business days. It then has to fix the error or explain in writing, after a reasonable investigation, why it thinks there was no error, usually within 30 business days.
Read this rightNo discrimination in housing or home loans (Fair Housing Act)
42 U.S.C. § 3604(a)–(b)
It is illegal to discriminate in selling, renting, or financing a home because of race, color, religion, sex, disability, familial status (having children), or national origin. This covers mortgage lenders and servicers too — for example, in who gets offered a loan modification and on what terms. You can file a complaint with HUD within 1 year or go to court within 2 years.
Read this rightDispute errors on your credit report
15 U.S.C. § 1681i(a)(1)(A)
If your credit report has something wrong or incomplete — like a payment reported late that you made on time — you can dispute it with the credit bureau for free. The bureau must investigate, usually within 30 days, and fix or delete information it cannot verify.
Read this rightMake the company that reported the error investigate it
15 U.S.C. § 1681s-2(b)(1)
The company that reported the information — such as your servicer — must investigate when a credit bureau passes along your dispute, and fix what is wrong with every bureau. In many cases you can also dispute directly with that company, which must then investigate and report back to you.
Read this rightCancel private mortgage insurance (PMI) when you have enough equity
12 U.S.C. § 4902(a)
If you pay private mortgage insurance on a loan for your main home, you can ask in writing to cancel it once your balance reaches 80% of the home's original value, if you have a good payment history and are current. It must end automatically when your balance is scheduled to reach 78%, if you are current.
Read this right