MICHIGAN JOINS $15.5 MILLION SETTLEMENT WITH MORTGAGE SERVICER FOR FORCE-PLACING DUPLICATIVE INSURANCE COVERAGE ON BORROWERS

The following information was released by the Michigan State Government:

The Michigan Department of Insurance and Financial Services (DIFS) joined 48 state financial regulatory agencies in reaching a $15.5 million settlement with mortgage servicer NewRez for improperly imposing "force-placed" insurance costs on borrowers who already had active homeowners insurance policies. Michigan's final share will be $274,206.

"Michiganders should be able to have confidence that their mortgage lenders and servicers operate with integrity and follow the law," said Director Fox. "This settlement demonstrates DIFS' commitment to holding licensees accountable and protecting Michiganders' pocketbooks. If consumers notice suspicious activity or have concerns related to their insurance or financial services, they should contact DIFS online or by calling 877-999-6442, Monday through Friday from 8 a.m. to 5 p.m."

Under the terms of the settlement, Fort Washington, Penn.-based NewRez LLC, will pay a total of $15.5 million. The company worked with state regulators to self-identify and proactively remediate $4.5 million to the impacted borrowers, and it will pay an additional $11 million for costs and penalties. NewRez will be required to implement and conduct enhanced monitoring for loans that have force-placed insurance and must also implement other actions to strengthen controls.

The settlement resolves an issue found in a multistate examination of NewRez that found the company had improperly imposed force-placed insurance on more than 4,200 borrowers nationwide who already had active homeowners insurance policies, causing consumer harm in the sum of $4.5 million.

Force-placed insurance is often required when a homeowner's policy is cancelled, delinquent, or is insufficient in coverage and the borrower has failed to secure replacement coverage. If necessary, the lender, bank, or loan servicer may force the replacement coverage, which allows the lender to protect its financial interest in the property. This practice usually is significantly more costly than if a consumer secures their own insurance policy.

The District of Columbia led the enforcement team, with the assistance of Arkansas, Iowa, Massachusetts, and Montana. NewRez cooperated with the states in the settlement.

Consumers with questions or concerns about this settlement or their own insurance and financial services should contact DIFS for assistance, Monday through Friday from 8 a.m. to 5 p.m. at 877-999-6442 or Michigan.gov/DIFS. Residents can also visit NMLS Consumer Access to verify that a company is licensed to do business in Michigan, and they may also view past enforcement actions.

The mission of the Michigan Department of Insurance and Financial Services is to ensure access to safe and secure insurance and financial services fundamental for the opportunity, security, and success of Michigan residents, while fostering economic growth and sustainability in both industries. In addition, the Department provides consumer protection, outreach, and financial literacy and education services to Michigan residents. Translation services are available for individuals with limited English proficiency who contact the Department.