10 Pa. Code § 59.9 - Force-placed insurance
(a)
Definition of force-placed insurance.
(1)
In general. For the
purposes of this section, the term "force-placed insurance" means hazard
insurance obtained by a servicer on behalf of the owner or assignee of a
mortgage loan that insures the property securing such loan.
(2)
Types of insurance not considered
force-placed insurance. The following insurance does not constitute
"force-placed insurance" under this section:
(i) Hazard insurance required by the Flood
Disaster Protection Act of 1973.
(ii) Hazard insurance obtained by a borrower
but renewed by the borrower's servicer as described in
12 CFR
1024.17(k)(1), (2), or (5)
(relating to escrow accounts).
(iii) Hazard insurance obtained by a borrower
but renewed by the borrower's servicer at its discretion, if the borrower
agrees.
(b)
Basis for charging borrower for force-placed insurance. A
servicer may not assess on a borrower a premium charge or fee related to
force-placed insurance unless the servicer has a reasonable basis to believe
that the borrower has failed to comply with the mortgage loan contract's
requirement to maintain hazard insurance.
(c)
Requirements before charging
borrower for force-placed insurance.
(1)
In general. Before a
servicer assesses on a borrower any premium charge or fee related to
force-placed insurance, the servicer must:
(i)
Deliver to a borrower or place in the mail a written notice containing the
information required by paragraph (c)(2) of this section at least 45 days
before a servicer assesses on a borrower such charge or fee;
(ii) Deliver to the borrower or place in the
mail a written notice in accordance with paragraph (d)(1) of this section;
and
(iii) By the end of the 15-day
period beginning on the date the written notice described in paragraph
(c)(1)(ii) of this section was delivered to the borrower or placed in the mail,
not have received, from the borrower or otherwise, evidence demonstrating that
the borrower has had in place, continuously, hazard insurance coverage that
complies with the loan contract's requirements to maintain hazard
insurance.
(2)
Content of notice. The notice required by paragraph (c)(1)(i)
of this section shall set forth the following information:
(i) The date of the notice;
(ii) The servicer's name and mailing
address;
(iii) The borrower's name
and mailing address;
(iv) A
statement that requests the borrower to provide hazard insurance information
for the borrower's property and identifies the property by its physical
address;
(v) A statement that:
(A) The borrower's hazard insurance is
expiring, has expired, or provides insufficient coverage, as
applicable;
(B) The servicer does
not have evidence that the borrower has hazard insurance coverage past the
expiration date or evidence that the borrower has hazard insurance that
provides sufficient coverage, as applicable; and
(C) If applicable, identifies the type of
hazard insurance for which the servicer lacks evidence of coverage;
(vi) A statement that hazard
insurance is required on the borrower's property, and that the servicer has
purchased or will purchase, as applicable, such insurance at the borrower's
expense;
(vii) A statement
requesting the borrower to promptly provide the servicer with insurance
information;
(viii) A description
of the requested insurance information and how the borrower may provide such
information, and if applicable, a statement that the requested information must
be in writing;
(ix) A statement
that insurance the servicer has purchased or purchases:
(A) May cost significantly more than hazard
insurance purchased by the borrower;
(B) Not provide as much coverage as hazard
insurance purchased by the borrower;
(x) The servicer's telephone number for
borrower inquiries; and
(xi) If
applicable, a statement advising the borrower to review additional information
provided in the same transmittal.
(3)
Format. A servicer must
set the information required by paragraphs (c)(2)(iv), (vi), and (ix)(A) and
(B) in bold text, except that the information about the physical address of the
borrower's property required by paragraph (c)(2)(iv) of this section may be set
in regular text. A servicer may use form MS-3A in appendix MS-3 of
12 CFR Part
1024, Subpart C (relating to mortgage
servicing) to comply with the requirements of paragraphs (c)(1)(i) and (2) of
this section.
(4)
Additional information. Except for the mortgage loan account
number, a servicer may not include any information other than information
required by paragraph (c)(2) of this section in the written notice required by
paragraph (c)(1)(i) of this section. However, a servicer may provide such
additional information to a borrower on separate pieces of paper in the same
transmittal.
(d)
Reminder notice.
(1)
In general. The notice required by paragraph (c)(1)(ii) of
this section shall be delivered to the borrower or placed in the mail at least
15 days before a servicer assesses on a borrower a premium charge or fee
related to force-placed insurance. A servicer may not deliver to a borrower or
place in the mail the notice required by paragraph (c)(1)(ii) of this section
until at least 30 days after delivering to the borrower or placing in the mail
the written notice required by paragraph (c)(1)(i) of this section.
(2)
Content of the reminder
notice.
(i)
Servicer
receiving no insurance information. A servicer that receives no hazard
insurance information after delivering to the borrower or placing in the mail
the notice required by paragraph (c)(1)(i) of this section must set forth in
the notice required by paragraph (c)(1)(ii) of this section:
(A) The date of the notice;
(B) A statement that the notice is the second
and final notice;
(C) The
information required by paragraphs (c)(2)(ii) through (xi) of this section;
and
(D) The cost of the
force-placed insurance, stated as an annual premium, except if a servicer does
not know the cost of force-placed insurance, a reasonable estimate shall be
disclosed and identified as such.
(ii)
Servicer lacking evidence of
continuous coverage. A servicer that has received hazard insurance
information after delivering to a borrower or placing in the mail the notice
required by paragraph (c)(1)(i) of this section, but has not received, from the
borrower or otherwise, evidence demonstrating that the borrower has had
sufficient hazard insurance coverage in place continuously, must set forth in
the notice required by paragraph (c)(1)(ii) of this section the following
information:
(A) The date of the
notice;
(B) The information
required by paragraphs (c)(2)(ii) through (iv) and (ix) through (xi) and
(d)(2)(i)(B) and (D) of this section;
(C) A statement that the servicer has
received the hazard insurance information that the borrower provided;
(D) A statement that requests the borrower to
provide the information that is missing;
(E) A statement that the borrower will be
charged for insurance the servicer has purchased or purchases for the period of
time during which the servicer is unable to verify coverage;
(3)
Format.
A servicer must set the information required by paragraphs
(d)(2)(i)(B) and (D) of this section in bold text. The requirements of
paragraph (c)(3) of this section apply to the information required by paragraph
(d)(2)(i)(C) of this section. A servicer may use form MS-3B in appendix MS-3 of
12 CFR Part 1024 , Subpart C to comply with the requirements of paragraphs
(d)(1) and (d)(2)(i) of this section. A servicer may use form MS-3C in appendix
MS-3 of 12 CFR Part 1024, Subpart C to comply with the requirements of
paragraphs (d)(1) and (d)(2)(ii) of this section.
(4)
Additional information.
Except for the borrower's mortgage loan account number, a servicer may not
include any information other than information required by paragraph (d)(2)(i)
or (ii) of this section, as applicable, in the written notice required by
paragraph (c)(1)(ii) of this section. However, a servicer may provide such
additional information to a borrower on separate pieces of paper in the same
transmittal.
(5)
Updating
notice with borrower information. If a servicer receives new
information about a borrower's hazard insurance after a written notice required
by paragraph (c)(1)(ii) of this section has been put into production, the
servicer is not required to update such notice based on the new information so
long as the notice was put into production a reasonable time prior to the
servicer delivering the notice to the borrower or placing the notice in the
mail.
(e)
Renewing or replacing force-placed insurance.
(1)
In general. Before a
servicer assesses on a borrower a premium charge or fee related to renewing or
replacing existing force-placed insurance, a servicer must:
(i) Deliver to the borrower or place in the
mail a written notice containing the information set forth in paragraph (e)(2)
of this section at least 45 days before assessing on a borrower such charge or
fee; and
(ii) By the end of the
45-day period beginning on the date the written notice required by paragraph
(e)(1)(i) of this section was delivered to the borrower or placed in the mail,
not have received, from the borrower or otherwise, evidence demonstrating that
the borrower has purchased hazard insurance coverage that complies with the
loan contract's requirements to maintain hazard insurance.
(iii)
Charging a borrower before end
of notice period. Notwithstanding paragraphs (e)(1)(i) and (ii) of
this section, if not prohibited by State or other applicable law, if a servicer
has renewed or replaced existing force-placed insurance and receives evidence
demonstrating that the borrower lacked insurance coverage for some period of
time following the expiration of the existing force-placed insurance (including
during the notice period prescribed by paragraph (e)(1) of this section), the
servicer may, promptly upon receiving such evidence, assess on the borrower a
premium charge or fee related to renewing or replacing existing force-placed
insurance for that period of time.
(2)
Content of renewal notice.
The notice required by paragraph (e)(1)(i) of this section shall set
forth the following information:
(i) The date
of the notice;
(ii) The servicer's
name and mailing address;
(iii) The
borrower's name and mailing address;
(iv) A statement that requests the borrower
to update the hazard insurance information for the borrower's property and
identifies the borrower's property by its physical address;
(v) A statement that the servicer previously
purchased insurance on the borrower's property and assessed the cost of the
insurance to the borrower because the servicer did not have evidence that the
borrower had hazard insurance coverage for the property;
(vi) A statement that:
(A) The insurance the servicer purchased
previously has expired or is expiring, as applicable; and
(B) Because hazard insurance is required on
the borrower's property, the servicer intends to maintain insurance on the
property by renewing or replacing the insurance it previously
purchased;
(vii) A
statement informing the borrower:
(A) That
insurance the servicer purchases may cost significantly more than hazard
insurance purchased by the borrower;
(B) That such insurance may not provide as
much coverage as hazard insurance purchased by the borrower; and
(C) The cost of the force-placed insurance,
stated as an annual premium, except if a servicer does not know the cost of
force-placed insurance, a reasonable estimate shall be disclosed and identified
as such.
(viii) A
statement that if the borrower purchases hazard insurance, the borrower should
promptly provide the servicer with insurance information.
(ix) A description of the requested insurance
information and how the borrower may provide such information, and if
applicable, a statement that the requested information must be in
writing;
(x) The servicer's
telephone number for borrower inquiries; and
(xi) If applicable, a statement advising a
borrower to review additional information provided in the same
transmittal.
(3)
Format. A servicer must set the information required by
paragraphs (e)(2)(iv), (vi)(B), and (vii)(A) through (C) of this section in
bold text, except that the information about the physical address of the
borrower's property required by paragraph (e)(2)(iv) may be set in regular
text. A servicer may use form MS-3D in appendix MS-3 of 12 CFR Part 1024,
Subpart C to comply with the requirements of paragraphs (e)(1)(i) and (2) of
this section.
(4)
Additional information. Except for the borrower's mortgage
loan account number, a servicer may not include any information other than
information required by paragraph (e)(2) of this section in the written notice
required by paragraph (e)(1) of this section. However, a servicer may provide
such additional information to a borrower on separate pieces of paper in the
same transmittal.
(5)
Frequency of renewal notices. Before each anniversary of a
servicer purchasing force-placed insurance on a borrower's property, the
servicer shall deliver to the borrower or place in the mail the written notice
required by paragraph (e)(1) of this section. A servicer is not required to
provide the written notice required by paragraph (e)(1) of this section more
than once a year.
(f)
Mailing the notices. If a servicer mails a written notice
required by paragraphs (c)(1)(i), (c)(1)(ii), or (e)(1) of this section, the
servicer must use a class of mail not less than first-class mail.
(g)
Cancellation of force-placed
insurance. Within 15 days of receiving, from the borrower or
otherwise, evidence demonstrating that the borrower has had in place hazard
insurance coverage that complies with the loan contract's requirements to
maintain hazard insurance, a servicer must:
(1) Cancel the force-placed insurance the
servicer purchased to insure the borrower's property; and
(2) Refund to such borrower all force-placed
insurance premium charges and related fees paid by such borrower for any period
of overlapping insurance coverage and remove from the borrower's account all
force-placed insurance charges and related fees for such period that the
servicer has assessed to the borrower.
(h)
Limitations on force-placed
insurance charges.
(1)
In
general. Except for charges subject to State regulation as the
business of insurance and charges authorized by the Flood Disaster Protection
Act of 1973 (42 U.S.C.A.
§§
4001-4131), all charges
related to force-placed insurance assessed to a borrower by or through the
servicer must be bona fide and reasonable.
(2)
Bona fide and reasonable
charge. A bona fide and reasonable charge is a charge for a service
actually performed that bears a reasonable relationship to the servicer's cost
of providing the service, and is not otherwise prohibited by applicable
law.
(i)
Relationship to Flood Disaster Protection Act of 1973. If
permitted by regulation under section 102(e) of the Flood Disaster Protection
Act of 1973 (42 U.S.C.A.
§
4012a(e)), a servicer
subject to the requirements of this section may deliver to the borrower or
place in the mail any notice required by this section and the notice required
by section 102(e) of the Flood Disaster Protection Act of 1973 on separate
pieces of paper in the same transmittal.
Notes
This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements).
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