A borrower's homeowners insurance policy is cancelled mid-term due to non-payment, but the escrow account shows the premium was paid. Investigation reveals the insurance company applied the payment to a different policy number. What should the servicer do?
Correct Answer
B) Work with the insurance company to correct the payment application
When payment errors occur between the servicer and insurance company, the servicer should work to resolve the payment application error rather than immediately force-placing insurance or penalizing the borrower. The servicer has a duty to properly manage escrow funds and ensure payments are correctly applied.
Why This Is the Correct Answer
When payment errors occur between the servicer and insurance company, the servicer should work to resolve the payment application error rather than immediately force-placing insurance or penalizing the borrower. The servicer has a duty to properly manage escrow funds and ensure payments are correctly applied.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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