Loan Protector Helps Lenders Cope with Added Pressure.(LoanProtector Insurance Services)

With increased regulatory scrutiny of loan servicing practices, companies such as LoanProtector Insurance Services that provide insurance tracking services are refining their businesses to meet increased demand.

Ron Wiser, president of Loan Protector, said that regulatory pressure and litigation threats are changing the environment for tracking and lender-placement of hazard insurance.

"Really, what has happened is that the standards of care have been moved higher by some recent rulings from the FTC," he said. The FTC in the past year has reached settlements with several mortgage servicers related to allegations of improper practices, including charges related to force-placement of insurance.

He said servicers should be familiar with the settlements that lenders have entered into with the FTC.

"While they are not actually regulations, they are in a sense precedents that a mortgage servicer needs to be aware of," Mr. Wiser told Mortgage Servicing News.

One thing lenders or their insurance tracking vendor need to do is investigate claims, especially verbal claims made by a borrower over the phone, regarding the existence of insurance coverage, he said. That helps to avoid the force-placement of duplicate insurance.

Sometimes borrowers give lenders inaccurate information about insurance coverage just because they are not experts in insurance industry terms and are not familiar enough with their coverage to provide the right information, he said.