You got a notice about force-placed or lender-placed insurance: what it means

What this notice is

What it does and does not mean

• It is not a foreclosure notice. But force-placed premiums are added to what you owe, often through your escrow account, which can raise your monthly payment sharply. A payment you cannot keep up with can lead to default.
• In many cases this insurance protects only the lender, not you or your belongings. It is not a replacement for your own homeowners policy.
• If you have escrow for insurance, are more than 30 days behind on your mortgage, your own policy was not canceled for a reason other than nonpayment, and the home is not vacant, your servicer generally may not buy force-placed insurance. It must pay your premium from escrow, advancing its own money if the account is short, and can then collect that from you. A small servicer may force-place instead if that costs you less.
• These notice rules do not cover flood insurance that federal flood law requires. Flood insurance has its own notices.

Deadlines and how to count them

• Day 0: the date on the first notice, or the date it was mailed. Mark it on your calendar.
• Day 30 or later: the earliest a final reminder can be sent.
• 15 days after the reminder: if your servicer receives proof by the end of this 15-day period that you have had the required coverage the whole time, it cannot charge you.
• Any time later: if you send proof after you were charged, the servicer has 15 days from receiving it to cancel the force-placed policy, refund the premiums and related fees you paid for any period when you had your own coverage too, and remove those charges from your account.
• Renewals: before charging you to renew force-placed insurance, the servicer must send a renewal notice at least 45 days ahead, and does so before each yearly anniversary.

What to do this week

• Call your insurance agent or company. If your policy lapsed, ask to reinstate it or buy a new one right away. Ask for a declarations page that shows your lender as mortgagee and the coverage dates.
• Send that proof to your servicer in the way the notice says (some servicers require it in writing). Keep a copy and proof of when you sent it.
• Ask your servicer in writing to cancel the force-placed policy and refund any overlapping charges.
• If you were charged even though you were covered, or the refund does not come within 15 days, send a written notice of error to the servicer's address for errors. Federal rules also require force-placed charges (other than premiums regulated by your state as insurance) to be for a service actually performed and reasonably related to the servicer's cost.
• If the cost has pushed your payment out of reach, ask your servicer about your options to avoid foreclosure before you miss a payment, and call a free HUD-approved housing counselor at (800) 569-4287.
• If your own policy was canceled because your servicer did not pay the premium from escrow on time, the CFPB suggests you may want to talk to a lawyer.

Is this the same in every state?

Scams tied to insurance notices

• Calls, texts or emails that claim to be your servicer's insurance department and ask for a card number or a payment app transfer to "stop" force-placed insurance. You stop it by sending proof of coverage, not by paying a caller.
• Anyone selling a "policy" that cannot give you a real declarations page from a licensed insurer.
• Anyone who asks for a fee before you have signed an agreement with your servicer. A company that is not your lawyer cannot charge for mortgage relief until then.