Force-Placed Insurance Under Investigation
There’s a dirty little secret that affects delinquent borrowers.
It goes like this:
The borrower misses one or more payments on their mortgage.
That results in the borrower’s homeowners insurance premium not being paid, and quite likely, cancellation of the borrower’s homeowners insurance policy.
Which, in turn results in the lender ordering “force-placed” insurance on the subject property.
The problem?
The borrower has no control over who issues that insurance or what it costs.
The premiums on such insurance can range from double to ten times the amount on a regular homeowners insurance policy.
Those costs are then added to delinquent payments, late payment fees, and various other charges that end up burying the delinquent borrower even deeper.
The State of New York has begun its own investigation into these practices and I think it’s likely that other states will also investigate forced-place insurance.
Gee, it’s just a thought . . . . .
I wonder . . . . (naw, couldn’t be . . . ?) if any of those forced-place insurance companies might be owned by mortgage lenders?
Source: DSNews.com article
April 13th, 2012 Posted in Inside Real Estate
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