North Dakota will receive $54,756 as part of a multistate settlement that resolves allegations the mortgage servicer NewRez LLC improperly charged homeowners for so-called force-placed insurance even though they already carried active policies, the North Dakota Department of Financial Institutions said.
What the settlement covers
The total settlement across states equals $15.5 million. State regulators say NewRez imposed extra insurance costs on more than 4,200 borrowers, causing roughly $4.5 million in direct consumer harm. NewRez will also pay an additional $11 million collectively to the 48 states involved for costs and penalties tied to the enforcement action.
| Item | Amount |
|---|---|
| Total settlement | $15.5 million |
| Consumer harm identified | $4.5 million |
| Additional costs/penalties to states | $11 million |
| North Dakota’s share | $54,756 |
Where the money will go in North Dakota
NDDFI Commissioner Lise Kruse told The Bismarck Tribune the state’s portion will be deposited into the department’s regulatory fund. That fund supports the regulation of entities supervised by the department, agency operations and financial education efforts across the state.
What is force-placed insurance?
Force-placed insurance is typically purchased by a lender or loan servicer when a homeowner’s insurance policy lapses, is canceled, is delinquent or does not provide sufficient coverage and the borrower has not secured replacement coverage. According to the Department of Financial Institutions, the practice often costs borrowers significantly more than if they obtained their own homeowners policy.
Company actions and oversight requirements
As part of the settlement, NewRez must strengthen controls and institute enhanced monitoring for loans that receive force-placed insurance. The state did not provide a full public list of all corrective measures, but the action requires changes intended to reduce the likelihood that consumers will be charged for overlapping coverage.
“The penalties and enhanced monitoring requirements underscore the importance of meeting state requirements to protect consumers,” Kruse said in a statement.
North Dakota regulators say the enforcement action is intended both to compensate affected borrowers and to prompt improved oversight by loan servicers.
- Amount North Dakota will receive: $54,756
- Why: NewRez imposed force-placed insurance on borrowers with active homeowners policies
- Use of funds: NDDFI regulatory fund for oversight, operations and financial education
How residents can get information
North Dakota residents with questions about the enforcement action are encouraged to contact the Department of Financial Institutions. The NDDFI provided the following contacts: Jan Murtha, Deputy of Non-Depository Division, via email at jmurtha@nd.gov or by calling the department at 701-328-9933.
This enforcement highlights the ongoing scrutiny mortgage servicers face from state regulators over practices that can raise costs for borrowers. For North Dakotans who carry homeowners insurance and maintain mortgage payments, the settlement serves as a reminder to monitor mortgage-account communications closely and to verify that servicers are not charging for overlapping insurance coverage.
State regulators said the settlement both compensates harmed consumers and imposes requirements on NewRez to prevent similar problems in the future. The department’s deposit of the settlement funds into the regulatory fund will support continued supervision of financial services and consumer education efforts in North Dakota.
