A Georgia servicer charges for force-placed coverage in 2026 without checking whether the borrower policy lapsed. What reasonable basis is required before charging for force-placed insurance?
Correct Answer
C) Prohibited: a reasonable basis to believe the coverage lapsed is needed
A servicer may not assess any charge or fee related to force-placed insurance unless it has a reasonable basis to believe the borrower failed to comply with the contract requirement to maintain insurance, and separately may not obtain force-placed insurance imposing an unreasonable charge. Other choices: protecting collateral is the purpose rather than the permission; a later refund does not authorize the charge; and pricing is the separate prohibition. Source: Ga. Comp. R. & Regs. 80-11-6-.02(2)(i)
Why This Is the Correct Answer
A servicer may not assess any charge or fee related to force-placed insurance unless it has a reasonable basis to believe the borrower failed to comply with the contract requirement to maintain insurance, and separately may not obtain force-placed insurance imposing an unreasonable charge. Other choices: protecting collateral is the purpose rather than the permission; a later refund does not authorize the charge; and pricing is the separate prohibition. Source: Ga. Comp. R. & Regs. 80-11-6-.02(2)(i)
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