IBA Compliance Connection

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We understand that the 2016 Mortgage Servicing Final Rule amended some of the force-placed insurance notice requirements under Regulation X. Do those changes affect the notice requirements in Illinois?

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Yes, because the Illinois law includes a safe harbor for servicers that substantially comply with the force-placed insurance notice requirements in Regulation X. In other words, if you comply with Regulation X (including the recent changes to the force-placed insurance notice requirements), you are deemed to comply with the Illinois law. For your reference, the Illinois law — the Collateral Protection Act — is included in our resources below.

For resources related to our guidance, please see:

  • Collateral Protection Act, 815 ILCS 180/40(b) (“A servicer subject to the regulations prescribed by the Consumer Financial Protection Bureau pursuant to Section 1463 of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act (12 C.F.R. 1024.37) that places hazard insurance in substantial compliance with those regulations shall be deemed to be in substantial compliance with the terms of this Act.”)
  • CFPB 2016 Mortgage Servicing Final Rule, 81 Fed. Reg. 72160, 72372 (“The Bureau is finalizing amendments to the force-placed insurance disclosures and model forms to account for when a servicer wishes to force-place insurance when the borrower has insufficient, rather than expiring or expired, hazard insurance coverage on the property. Additionally, servicers now will have the option to include a borrower's mortgage loan account number on the notices required under § 1024.37. The Bureau also is finalizing several technical edits to correct discrepancies between the model forms and the text of § 1024.37.”)
  • Collateral Protection Act, 815 ILCS 180/10(3) (Requires creditor to provide notice regarding force-placed insurance at the time the credit agreement is entered into.)
  • Collateral Protection Act, 815 ILCS 180/15 (“Within 30 calendar days following the purchase of collateral protection insurance, the creditor shall mail to the debtor and to any cosigner, guarantor, or other person liable with the debtor for the obligation, at the last known address on file with the creditor for any such person, a notice entitled ‘Notice of Placement of Insurance’ in a form substantially similar to the following: . . .”)