The Newrez lender-placed insurance settlement’s $15.5 million total includes state payments and borrower relief already paid. Executed August 12, 2026, the agreement separately requires a review for further refunds and checks on new insurance placements. It does not create a $15.5 million claims fund for current customers. Executed consent order.

What conduct and examination period does the order address?

In its August 12 announcement, the Conference of State Bank Supervisors said Newrez improperly imposed force-placed insurance on more than 4,200 borrowers who already had active homeowners policies. Lender-placed insurance (LPI) protects the lender’s property interest when required coverage is missing or inadequate, and generally costs more than coverage borrowers arrange themselves. CSBS announcement.

The examination began around January 24, 2022, covered November 1, 2020–October 31, 2021, and produced a September 12, 2022 report identifying Regulation X violations. Newrez neither admits nor denies wrongdoing under the agreement. Order, recitals.

Those examination dates are distinct from both the settlement date and the additional audit period. For professionals interpreting mortgage regulatory actions, that distinction separates the conduct already examined from the accounts subject to further review.

Where the $15.5 million goes

Section IV divides the settlement into three components:

The state payments are due within 30 calendar days of the effective date. A state may elect to use its penalty allocation for consumer relief or another legally authorized purpose, so the penalty designation does not determine every state’s ultimate use. Order, Section IV.

Because the total combines these different components, dividing $15.5 million by the reported borrower count would not produce a meaningful estimate of an individual refund.

How additional refunds will be identified

A separate self-audit must review LPI fees collected or refunded for newly boarded loans in participating states from January 1, 2023 through the agreement’s effective date. “Boarded” means brought onto the servicing system.

Newrez must submit its audit methodology within 30 days of the effective date. Regulators have 14 days to provide feedback or non-objection; silence counts as non-objection. Feedback triggers revision and resubmission. The audit is due within 180 days of regulatory non-objection, with results submitted within 30 days after completion. Order, Section IV.4.

Where the audit identifies erroneously placed insurance for which borrowers actually paid Newrez premiums or fees, the company must refund those payments in full. It must document applicable relief previously provided and report remediation progress every 90 days until affected consumers are made whole. These deadlines govern the audit and reporting process; they do not establish a universal check-mailing date. Massachusetts regulator’s order text.

How new insurance placements must be tested

The enhanced standards must begin within 90 days of the effective date and run for one year from implementation. Testing may be outsourced; internal testing must be performed by audit or compliance staff independent of the business being tested.

Monthly testing targets newly boarded loans in participating jurisdictions with LPI initiated in the preceding month. Sampling begins with the first full calendar month after implementation. The order requires:

• Random selection of 10% where a state has at least 20 eligible loans, or at least one loan in each smaller eligible pool.
• Manual inspection of all imaged documents for sampled loans. A loan fails if LPI was assessed despite documentary evidence of a homeowners policy valid at that time.
• Failure of the reporting-period metric when the error rate exceeds 5%.
• Reporting within 30 days after finalizing the monthly report.

The specified cure is cancellation of improper LPI and refunds of paid premiums and fees. The 5% threshold measures a monitoring failure; it does not authorize erroneous charges below that level. Order, Section III.

For managers responsible for servicing and payment administration, these checks require reconciling document images with system entries. A database field showing missing insurance cannot settle a review when the underlying file contains a valid policy.

Reconcile coverage dates with charges and payments

Existing federal duties operate separately from the settlement timetable. For loans covered by Regulation X, § 1024.37, a servicer needs a reasonable basis to believe required hazard coverage is missing before charging for force-placed insurance. Initial charging generally requires a notice at least 45 days beforehand, followed by a reminder at least 30 days after the first notice and at least 15 days before charging, without receipt of sufficient evidence of continuous compliant coverage.

A declarations page, insurance certificate, policy or similar written confirmation can establish coverage. The coverage must meet the loan contract’s requirements, and verification with the insurer or agent may be needed.

Within 15 days after receiving sufficient evidence, whether from the borrower or another source, the servicer must cancel force-placed coverage, refund paid premiums and related fees for overlapping coverage, and remove assessed charges and fees for that overlap. Flood insurance required under the Flood Disaster Protection Act is excluded from this section’s definition and follows separate rules. Regulation X evidence and cancellation provisions.

A hypothetical overlap calculation

Assume a borrower paid $900 for January–March LPI, charged at $300 per full month with no fees. Their own compliant policy began February 1 and remains active. They provide sufficient evidence on April 10.

The overlap is February and March: $600. January’s $300 could remain only if that charge was otherwise lawful, including compliance with applicable notice requirements. If the borrower’s policy instead covered all three months, the overlap would be $900. These are illustrative calculations, not settlement award amounts.

What borrowers should expect about notification

The order assigns identification and refund work to Newrez. It does not publish a consumer claim form or establish one notification date for every borrower; its general notices provision concerns communications between the company and regulators. Current customer status alone does not establish eligibility. Order, Sections IV and VII.

Borrowers with homeowner servicing questions can request the policy dates, reason for placement, evidence-receipt date and itemized correction. For an unresolved servicing error, the CFPB advises sending a written notice to the servicer’s designated error-resolution address, if one exists. CFPB servicing guidance.

To assess an account correction, compare the coverage dates, the date sufficient evidence arrived, amounts charged, amounts paid and corrections posted. A cancellation entry alone does not demonstrate that the refund and charge removal were completed.