Are Servicers Allowed to Charge a Borrower for Force-Placed Insurance Coverage?

In general, servicers are not allowed to charge you for force-placed insurance coverage, unless the servicing company has a reasonable basis to determine that you have failed to maintain hazard insurance and has duly notified you about this situation.

According to the current regulations, a servicer has to provide you with two notices. First, the servicer should send you an initial notice at least 45 days before charging you for the force-placed insurance coverage. If you fail to respond, the servicer must send you a second reminder no earlier than 30 days after the first notice and at least 15 days before charging you for the force-placed insurance coverage. Charges related to force-placed insurance are regulated, as these charges must be incurred for a service that was actually performed, and must bear a reasonable relationship to the servicing company's cost of providing this service.