Most states prohibit lenders from requiring borrowers to purchase insurance through a particular insurance agent. Borrowers are, therefore, free to choose the agent through whom they would like to purchase insurance, though these states do allow lenders the right to approve or disapprove of such agents, based on “reasonable” and uniform standards.
Some of these states do require a lender to notify their borrowers of such rights, while some do not. Regardless, DocuTech provides documents like Cx2778 for all of these states which do not require a specific disclosure, in order to help clients demonstrate that the borrower is aware of their rights and that the lender has not coerced the borrower into buying insurance through a particular agent.
Based on the findings from DocuTech’s annual state-disclosure audit, the text of certain state versions of Cx2778 will be changed as follows:
- Maine: The entire language of the Maine version of Cx2778 has been replaced with language that more closely matches the language set forth in Me. Rev. Stat. Ann. tit. 24-A, §2169. In addition, the citation on the document has been reformatted to conform with Blue Book standards.
- Ohio: The entire language of the Ohio version has also been replaced with language meant to be easier for the borrower to read and to specify exactly what standards may be used by the lender to reject the borrower’s choice. In addition, Ohio Rev. Code Ann. §3901.211 has been added to the citation.
- North Dakota: Other than very minor edits (such as changing the citation to conform with Blue Book standards), the only substantive change that will be made to this version is the inclusion of the following clause at the end of the last sentence: “. . . the terms and provisions of the insurance policy, and the adequacy of coverage.”
- Illinois: An incorrect citation on this document (to IL Insurance Commissioner Rules and Regulations Rule 4-3.02) has been removed.
- Georgia: The citation has been updated to be more specific and to conform with Blue Book standards.
These changes will take effect on July 3, 2012. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
June 25, 2012
DR 115477, 115669, 119955, 123193, and 123621