The Michigan Department of Insurance and Financial Services (DIFS) joined 48 other state financial regulatory agencies in reaching a $15.5 million settlement with mortgage servicer NewRez for imposing force-placed insurance on borrowers who already had active homeowners insurance policies.
Michigan's share of the settlement is $274,206. A multistate examination found that NewRez had improperly imposed force-placed insurance on more than 4,200 borrowers nationwide, causing $4.5 million in consumer harm.
Under the settlement terms, Fort Washington, Pennsylvania-based NewRez LLC will pay $15.5 million total. The company identified and proactively reimbursed $4.5 million to affected borrowers and will pay an additional $11 million in costs and penalties. NewRez must implement enhanced monitoring for loans with force-placed insurance and strengthen internal controls.
The District of Columbia led the enforcement effort, with assistance from Arkansas, Iowa, Massachusetts, and Montana. Force-placed insurance is typically required when a homeowner's policy is cancelled, delinquent, or insufficient, and the borrower has not secured replacement coverage. This practice is typically significantly more costly than coverage a consumer would secure independently.