Topic: Bankruptcy
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The collateral protection insurance coverage has lapsed on a property that is subject to a residential mortgage loan. However, the borrower has filed for bankruptcy, and we have received notice of the automatic stay. Can we charge the customer for the forced placement of insurance coverage? Our account agreements permit us to force place insurance and charge the borrower.
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No, in this case, you most likely cannot charge the customer for the forced placement of insurance coverage without court approval. Regulation X requires that you send certain notices before you may charge the borrower for force placing insurance, and there is no exception made for borrowers in bankruptcy. At the same time, the federal…
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What are the risks for hiring NMLS-registered mortgage loan originators who have bankruptcies or numerous collection items on their credit reports? Can we have two different standards, one for unregistered originators and another for registered originators?
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We believe that hiring a mortgage loan originator (MLO) with a bankruptcy or numerous collection items could pose some risks under the Regulation Z, which requires you to run credit checks and assess each loan originator’s financial responsibility, character, and general fitness, among other requirements. However, the degree of risk would depend on the specific…