Multistate agreement addresses duplicative coverage charges affecting more than 4,200 mortgage borrowers nationwide.
The Michigan Department of Insurance and Financial Services has joined a $15.5 million multistate settlement with mortgage servicer NewRez LLC over force-placed insurance charges imposed on borrowers who already had active homeowners coverage.
Michigan will receive $274,206 under the agreement, DIFS announced Aug. 19. The department joined 48 state financial regulatory agencies in the action, which followed a multistate examination of the Fort Washington, Pennsylvania-based company.
Regulators found that NewRez improperly placed insurance on more than 4,200 borrowers nationwide despite existing homeowners policies, resulting in approximately $4.5 million in consumer harm. According to DIFS, NewRez worked with regulators to identify the affected accounts and has remediated $4.5 million to borrowers. The company will pay another $11 million in regulatory costs and penalties.
Force-placed insurance—also known as lender-placed insurance—is coverage obtained by a lender or mortgage servicer when a homeowner’s required policy has lapsed, is inadequate or has been canceled and the borrower has not secured replacement coverage. Although it protects the lender’s financial interest in the property, it is generally more expensive than insurance purchased directly by a homeowner.
The issue in this case was not the use of force-placed coverage itself, but the imposition of that coverage when borrowers already had valid policies. The settlement requires NewRez to strengthen its controls and conduct enhanced monitoring of loans carrying force-placed insurance.
“Michiganders should be able to have confidence that their mortgage lenders and servicers operate with integrity and follow the law,” DIFS Director Anita Fox said in the department’s announcement. Fox said the agreement reflects the department’s efforts to hold licensed companies accountable and protect consumers.
The District of Columbia led the enforcement team, assisted by Arkansas, Iowa, Massachusetts and Montana. DIFS said NewRez cooperated with the participating states.
DIFS urged consumers who notice suspicious activity or have concerns about their mortgage servicing, insurance or other financial services to seek assistance. The department accepts complaints and fraud reports online in addition to providing help through its consumer hotline.
Information for this article was provided by Michigan Department of Insurance and Financial Services. Views and claims expressed in this article are those of the source company and do not necessarily reflect the views of AgencyEquity.com. This article may have been edited with the help of AI.
