ST. PAUL — Minnesota and 45 state financial regulation agencies have reached a multi-million dollar settlement with one of the nation’s largest mortgage servicers for improperly imposing “force-placed” insurance costs on borrowers who already had active homeowners’ insurance policies. 

Under the terms of the settlement, NewRez LLC will pay a total of $15.5 million. The company worked with state regulators to self-identify and proactively return $4.5 million to the impacted borrowers. It will pay an additional $11 million for costs and penalties, with $95,566 going to Minnesotans. NewRez will be required to implement and conduct enhanced monitoring for loans that have force-placed insurance. The company — based out of Fort Washington, Penn. — must also implement other actions to strengthen controls.

The settlement resolves an issue identified in a multistate examination of NewRez, which found the company had improperly imposed “force-placed” insurance on more than 4,200 borrowers nationwide with active homeowners’ insurance policies, causing $4.5 million in consumer harm. 

“Homeowners work hard to protect their homes and keep their insurance coverage in place. They should be able to trust that when they’ve done everything required of them, they won’t be charged for unnecessary insurance,” said Minnesota Department of Commerce Temporary Commissioner Julia Dreier. “For the borrowers affected here, these improper charges meant real money coming out of household budgets. That’s unacceptable and one of the reasons this settlement is so important.”

Force-placed insurance is coverage purchased by a mortgage lender when a homeowner fails to maintain sufficient insurance on the property. The coverage protects the lender’s financial interest in the property. It is typically more expensive than traditional homeowners insurance and generally provides less coverage. 

The District of Columbia led the enforcement team, with the assistance of Arkansas, Iowa, Massachusetts, and Montana. NewRez cooperated with the states in the settlement. 

“Minnesotans should not be charged for insurance coverage they don’t need and already have. It’s stressful, unfair, and not allowed,” said Assistant Commissioner of Enforcement Sara Payne. “This makes it especially important for mortgage lenders and servicers to get it right.” 

Minnesota residents who have questions about the enforcement action can call 651-539-1600 or email consumer.protection@state.mn.us.

The Minnesota Department of Commerce is here to help. Minnesota consumers and businesses can contact Commerce’s Enforcement Division about concerns or complaints:  

• File a complaint online  
• Email: consumer.protection@state.mn.us   
• Verify whether a company is licensed to do business in Minnesota: License Lookup. 
• Search Commerce Actions and Regulatory Documents to view past enforcement actions. 

Connect with the Minnesota Commerce Department 
Get updates and news from the Minnesota Department of Commerce by following Commerce at mn.gov/commerce or @MNCommerce on social media.

Contact 
Jen Longaecker | Media Relations and Public Affairs Director
651-478-9457
Minnesota Department of Commerce
news.commerce@state.mn.us