It’s estimated that thousands of homeowners have been ripped off with forced placed insurance, and they will be interested to know that the National Mortgage Complaint Center is beginning a national initiative to try to put right this scandal.
The watchdog is asking homeowners to contact them on their website, NationalMortgageComplaintCenter.com as they want to hear their story, and they have had enough complaints from consumers to know that this problem is huge.
Forced placed insurance is being put on homes that are empty and which may be liable to vandalism. This expensive and somewhat exotic insurance generally costs between three and five times the amount of a standard insurance policy. It doesn't take a genius to realize that the profit margins for banks and home loans servicing firms can be considerable.
The National Mortgage Complaint Center believes there could be tens of thousands of US homeowners who are paying this premium because their bank or loan servicing company has signed them up, in some cases without their knowledge. In many cases homeowners are already paying for a standard insurance policy and the problem has only come to light when they noticed their payments were much too high.
According to the National Mortgage Complaint Center, some homeowners have been told that forced placed insurance is required on their property. Apparently this isn't correct, as it's only necessary in cases where the house has been abandoned or vacant, or the homeowner has stopped making mortgage payments. The insurance policy cannot be applied arbitrarily.
It's the aim of the National Mortgage Complaint Center to identify every US homeowner who has recently been a victim of this forced placed insurance scam, and who has been paying for this largely unnecessary homeowner’s insurance on top of their standard insurance policies.
The scam is the banks could easily pay the home owner's prior insurance carrier that lapsed for far lower cost, and only if the prior carrier refuses should they be allowed to use their cronies insurance.
Well, I have had forced oplaced insurance put on my home after doing a modification with Litton Loan. They were to pay my insurance as they stated,and a year later we received a $4700.00 insurance escrow added to our mortgage. Our regular insurance was $1300.00. BIG difference. Theyare ripping me off, not to mention my new mortgage amount is $400.00 more a month. I have done alot of investicating about forced placed insurance, and they have alot of people out there that are being ripped off. Infact, it is being recognized and a class action lawsuit is in place as we speak. I pray that it happens soon. I cannot afford an additional $400 a month, especially when it was fromma year ago, and they messed up. Funny how 2011 I have my insurance agent again, and they paid my insurance. AMAZING!!!!!!!
well Mike, your wrong it is a scam I havd a house fire Feb 2011 house is not livable at this time working with my homeowners ins to repair house i get a letter from the bank stateing i must get vacant property ins even though my homeowners ins ispaid in full for all of 2011 and the bank says if i dont get it they will buy ti and add to to my mortgage payment oh and the cost will be five time the amount of my current ins, dont tell me this is not a scam,let me guess what bank or servicing compamy do you work for
They rip off by a method knowing well that properties ARE insured
I thought your comments were interesting, but still think that its a good idea that this is being investigated further by the National Mortgage Complaint Center, after all isn't that the job of a watchdog?
If the insurance is only being implemented when a homeowner has let a policy lapse then fine, but if it isn't then surely this is an abuse of the system. It will be interesting to see the extent of the problem when the watchdog has completed its investigations.
The folks at the National Mortgage Complaint Center don't know what they are talking about. "...there could be tens of thousands of US homeowners who are paying this premium because their bank or loan servicing company has signed them up, in some cases without their knowledge. In many cases homeowners are already paying for a standard insurance policy and the problem has only come to light when they noticed their payments were much too high." This insurance is normally ONLY placed when the homeowner allows their insurance to lapse or it has been canceled, and then only after at least two warning letters have been mailed asking for replacement coverage - a requirement of the mortgage agreement. More nonsense: "This expensive and somewhat exotic insurance generally costs between three and five times the amount of a standard insurance policy. It doesn’t take a genius to realize that the profit margins for banks and home loans servicing firms can be considerable." The lender placed coverage is more expensive since it is non-underwritten, and it is rare for the lender to be compensated at all for any such coverage. To receive compensation, they must have a licensed insurance agency which is unusual. There is no scam here. There may be abuses of the system, but the primary issue is the lender protecting themselves and their investors from uninsured losses as directed by the various government regulatory agencies. Get the facts straight before you go screaming scam...