HPMLs, Escrow & Hazard Insurance

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Question:

We're traditionally a home equity lender who has never tracked hazard insurance. Under the high priced mortgage rules, we are now required to escrow for taxes and insurance if it's an HPM and a first lien. Are we required to force place hazard insurance to comply with Reg. Z if we have an uncooperative borrower who has cancelled his insurance even though we are escrowing?

Answer:

The force placement of insurance (outside of flood coverage, if in a SFHA) in such a case would come down to whether or not the borrower has contracted with you to maintain insurance on the property for the life of the loan.

First published on BankersOnline.com 4/12/10