Forced place insurance has many problems. One is that the homeowner may have no standing to enforce the insurance policy—even if being charged for the premiums.
Continue Reading Property Owner May Lack Standing to Enforce a Lender Placed Policy
Florida Senate Passes Insurance Bill That Will Make Mortgages Non-Negotiable Under Federal Regulations
Mortgage servicers, banks, and their accountants must sign off under federal regulations that the loans that they package and are underwritten by Fannie Mae comply with certain requirements, including those involving insurance. If the mortgage does not have the proper insurance, it cannot be part of the Fannie Mae backed system. The Florida Senate passed insurance legislation which clearly jeopardizes the chances of home ownership by Floridians with a Fannie Mae mortgage because it is non-compliant. Worse is that when many Floridians buy that type of non-compliant insurance, they may have the additional burden and expense of the mortgage servicer adding force-placed coverage.
Continue Reading Florida Senate Passes Insurance Bill That Will Make Mortgages Non-Negotiable Under Federal Regulations
Who Does Lender-Placed Insurance Protect After a Covered Loss Under?
Embedded in almost any residential mortgage or deed of trust, mortgage lenders include a requirement that homeowners maintain an insurance policy covering the improvements erected on the property, such as the house, garage, shed, or pool. Where a homeowner’s policy of insurance lapses, most insurance policies will allow your mortgage lender to obtain “lender-placed” or “forced-placed insurance.”
Continue Reading Who Does Lender-Placed Insurance Protect After a Covered Loss Under?
I have a Lender-Placed Insurance Policy; What Happens to My Homeowners’ Insurance Claim?
Some homeowners may have lender-placed insurance policies, also known as “creditor-placed” or “forced-placed policies.” These policies occur when there is an insurance policy placed by a bank or mortgage company on a home when the homeowners’ insurance policy may have lapsed or is deemed insufficient by the bank. Under these lender-placed insurance policies, the bank or mortgage company is the named policyholder and insured. This poses a problem when a loss occurs on the property and the homeowner reports a claim to his or her insurance company.
Continue Reading I have a Lender-Placed Insurance Policy; What Happens to My Homeowners’ Insurance Claim?
What is Force-placed insurance?
Force-placed insurance is an insurance policy placed by a lender, bank or loan servicer on a home when the property owners’ own insurance is cancelled, has lapsed or is deemed insufficient and the borrower does not or cannot obtain another policy. They are also known as “creditor-placed, lender-placed or collateral protection” insurance.
Force-Placed Insurance Class Action Survives Motion to Dismiss
I recently blogged about the issues regarding forced-placed insurance policies, how you can prevent them, and why insurance companies benefit from these types of policies. On August 6, 2015, U.S. District Judge Kenneth Marra denied a motion by Deutsche National Bank Trust and the American Home Mortgage Investment Trust (AHMSI) ruling that homeowners could pursue claims under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and the Florida Consumer Collection Practices Act, as well as breach of mortgage agreement, breach of implied covenant of good faith and fair dealing, and unjust enrichment of loan servicer. The case, Martorella v. Deutsche Bank National Trust Company,1 is currently under appeal from the Southern District of Florida.
Continue Reading Force-Placed Insurance Class Action Survives Motion to Dismiss
HSBC and Assurant Settle Forced-Placed Kickback Class Action Suit
In certain situations, insurance companies may hedge their risk against any loss in an insurance contract. This is called re-insurance. Typically, no one would have an issue with this as it is smart to minimize your risk in certain situations.
Continue Reading HSBC and Assurant Settle Forced-Placed Kickback Class Action Suit
Are Lenders Properly Protecting Themselves and Property Owners When Property Insurance Lapses? – Force Placed Insurance Series
When a borrower fails to obtain or maintain proper hazard, flood, or wind/hail insurance on property that secures a loan, the lender remains authorized to “force place insurance” on the property in order to protect the lender’s interest in the property. Sounds reasonable… right? On its face, it makes sense that lending institutions should have the right to make sure property securing a loan maintain adequate insurance in the event of a natural disaster or other hazard that property owners encounter.
Like so many issues with both high finance and insurance carriers, though, one can’t necessarily take force placed insurance at face value. In this initial installment of the Force Placed Insurance Series, I’ll take a closer look at issues surrounding force placed insurance.
JPMorgan Proposed Class Action Settlement Of $22 Million Over Force-Placed Flood Insurance
Recently, JPMorgan sought court approval to the terms of a settlement with parties in three class action cases. The cases were consolidated and alleged that JPMorgan force-placed exorbitantly priced flood insurance policies on homeowners whose mortgages were serviced by it.
Mortgage Lenders Must Purchase Flood Insurance for Borrowers
I was recently asked if a homeowner could rely upon their mortgage lender’s statement that the lender would purchase a “force place” flood insurance policy if the homeowner did not do so themselves. These homeowners could not secure a flood insurance policy on their own and never heard from the bank. Naturally, they assumed the bank purchased the policy and they were covered. Months later Hurricane Sandy flooded the home and the homeowners learned that bank had not purchased the insurance and the home was not covered for the loss.
Continue Reading Mortgage Lenders Must Purchase Flood Insurance for Borrowers