Which statement about force-placed insurance is correct?
Correct Answer
D) It may be placed after proper notice to the borrower of the lapse
Force-placed insurance can only be obtained after the lender provides proper notice to the borrower about the insurance lapse and allows time for the borrower to obtain coverage. It typically costs more than borrower-selected insurance.
Why This Is the Correct Answer
Force-placed insurance can only be obtained after the lender provides proper notice to the borrower about the insurance lapse and allows time for the borrower to obtain coverage. It typically costs more than borrower-selected insurance.
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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A 7/1 ARM is in its 9th year. The current rate is 6.5%, the fully indexed rate is 4.8%, and the loan has 2/2/5 caps with a 4% floor. What is the lowest rate the borrower could pay at this adjustment?
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