A borrower obtains adequate flood insurance 30 days after receiving a force-placement notice. What should the servicer do?
Correct Answer
D) Verify the policy and avoid or terminate overlapping force-placed coverage as applicable
Why this is correct: The correct answer is "Verify the policy and avoid or terminate overlapping force-placed coverage as applicable." The goal is to ensure the property has adequate coverage without unnecessary duplication. If the borrower obtains adequate coverage during the notice period, the servicer must verify it meets requirements. If verified, the servicer should avoid force placing new coverage or terminate any interim force-placed coverage that was purchased, following applicable refund rules for any overlap. Why the other choices are wrong: "Force place duplicate coverage at day 45 regardless" is wrong because if the borrower has adequate coverage, force placement is unnecessary and improper. "Demand coverage equal to the land value" is incorrect; flood insurance must cover the building, not the land value. "Ignore the borrower's policy" is false; the servicer must review and verify the borrower's policy. Exam tip: Borrower compliance during the 45-day period stops the force placement process. Always verify the new policy first.
Why This Is the Correct Answer
Why this is correct: The correct answer is "Verify the policy and avoid or terminate overlapping force-placed coverage as applicable." The goal is to ensure the property has adequate coverage without unnecessary duplication. If the borrower obtains adequate coverage during the notice period, the servicer must verify it meets requirements. If verified, the servicer should avoid force placing new coverage or terminate any interim force-placed coverage that was purchased, following applicable refund rules for any overlap. Why the other choices are wrong: "Force place duplicate coverage at day 45 regardless" is wrong because if the borrower has adequate coverage, force placement is unnecessary and improper. "Demand coverage equal to the land value" is incorrect; flood insurance must cover the building, not the land value. "Ignore the borrower's policy" is false; the servicer must review and verify the borrower's policy. Exam tip: Borrower compliance during the 45-day period stops the force placement process. Always verify the new policy first.
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An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
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A Closing Disclosure previously showed a 6.412% APR. Before consummation, the creditor determines that the disclosed APR has become inaccurate under the applicable Regulation Z accuracy rules and that the correct APR is 6.680%. No valid emergency waiver applies. What corrected-disclosure waiting period is required?