Missouri Enacts Provisions Regarding Lender-Placed Insurance
Missouri recently enacted amendments to its insurance law, including provisions regarding lender-placed insurance. The lender-placed insurance amendments apply to mortgaged real property, except for (i) transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, (ii) optional insurance offered by a lender or servicer that the borrower elects, (iii) property insurance on owned real estate (following a foreclosure or deed in lieu) that a lender or servicer purchases, and (iv) insurance that is not charged to the borrower.
The law requires that lender-placed insurance not become effective, subject to applicable law or the mortgage agreement, until the date the property insurance lapses, and it must end at the earliest of the following: (i) acceptable, evidenced insurance becomes effective, (ii) the subject property is no longer collateral for a mortgage loan, (iii) as specified by the policy or insurance certificate, (iv) as specified by the lender or servicer, or (v) when the policy terminates.
Among other things, the law also prohibits the following: (i) an insurer issuing these policies on properties that it or its affiliates owns, services, or owns the servicing rights to, (ii) an issuing insurer compensating a lender, insurer, investor, or servicer for lender-placed insurance policies, and (iii) an insurer sharing premium or risk with the lender, servicer, or investor that obtained the lender-placed insurance.
Most of the new provisions become effective on August 28, 2023.