Is Mortgage Insurance Required

Mortgage insurance required?

An FHA loan requires mortgage insurance. The lender collects the mortgage insurance premium (MIP) on conclusion and sends it to the FHA. The MIP is a government required insurance policy for an FHA loan. French banks all require a life insurance policy linked to your mortgage. In the event of death, the policy pays the balance of the mortgage.

Regulatory authority adopts new mortgage insurance regulations - Newsletter

542 contains new provisions on mortgage insurance jointly provided by creditor lenders and other credit institution providers. Regulatory authorities have submitted a proposal for a decree to the insurance industry for comment. This new Act will apply to insurance in connection with residential mortgage loan insurance to cover pledged property or repayment of fire-related debts and related risk (e.g. earthquake and tsunami) and to the debtor's insurance policy.

It' s primary objective is to avoid a premium surcharge on insurance premium in favor of banks. Any payment or commission in connection with the purchase or administration of such insurance is specifically forbidden by statute, even the collecting of bonuses. Furthermore, the Act aims to enhance insurance company competitiveness by prescribing an open tender procedure for mortgage insurance.

Under the new legislation, where the policyholder is a company granting mortgage lending, the policyholder will be required to pay the mortgage. To this end, the bank must conclude a group insurance policy on its borrowers' account following a tender procedure in order to create the legal foundation for this insurance. The tender procedure must be communicated to all locally based insurance companies to make sure that any qualifying insurance company interested in taking part can make a tender.

The debtor may take out mortgage credit insurance on an individual basis, provided that the insurance coverage meets the statutory minima and is in line with the group policy. In the case of a fractional claim, the amount covered must be the same as the cost of the repairs or alterations, taking into consideration the construction material and characteristics, without deducting depreciations or old values.

Any interested insurance company may take part if it has a higher than BBB (or its equivalent) rated exposure. Tendering should be done by automatic award to the insurance company offering the cheapest rate, inclusive of a brokerage fee. Technological specifications and the amount of money required from participant intermediaries are determined by the regulatory authority.

The current proposal requires three years' group insurance brokerage expertise if the amount is higher than the premiums of the corresponding bidder insurance. As well as the tasks laid down in the Ordinance, a brokers may be appointed to recover the premiums, notify the policyholders of the terms and condition, channelize insurance entitlements and conduct the comparison procedure between submission of the receivable and making payments.

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