FORCE-PLACED INSURANCE

Numerous banks, mortgage lenders and mortgage servicers are facing legal and regulatory action for their so-called “force placed insurance policies,” related to purchase of these policies from affiliated insurers resulting in undisclosed and unlawful commissions and kickbacks to the lenders and mortgage servicers. Banks and mortgage companies under investigation include:

  • American Security
  • Assurant
  • QBE Insurance
  • Balboa Insurance
  • Bank of America
  • Chase Bank
  • Citigroup
  • CitiMortgage
  • JP Morgan Chase
  • SunTrust
  • Wells Fargo
  • Ocwen Loan Servicing
  • Green Tree

FORCE PLACED INSURANCE DEFINED

“Force placed insurance,” also referred to as “creditor placed” or “lender placed” is insurance that banks/mortgage companies purchase to cover a home when a homeowner lapses on mandated insurance coverage.

This practice, while legal, has been linked to other unethical, deceitful, and illegal tactics aimed to benefit lenders and insurance providers at the homeowner’s expense.

LENDER PLACED INSURANCE TACTICS EXPOSED

Lenders have been known to take advantage of force placed insurance policies by utilizing a number of unscrupulous business tactics, including:

  • Placing forced insurance policies on homes already covered by insurance.
  • Keeping the force placed coverage even after receiving evidence that a borrower has recovered their own insurance.
  • Purchasing a force placed plan at a rate substantially higher than the current market rate, often times up to 10 times the price a homeowner would otherwise be able to purchase such.
  • Interfering with a homeowner’s existing coverage in order to force-place coverage with the mortgage lender or servicer’s own insurer or affiliate.
  • Charging homeowners for more than the actual cost of the force placed insurance policy.
  • Failing to inform the homeowner that their insurance lapsed and setting up force placed coverage without homeowner’s knowledge.
  • Purchasing the force placed coverage from the bank’s own insurance subsidiary.
  • Taking undisclosed commissions, kickbacks, or other incentive from force-placed insurers in exchange for the placement of insurance with these insurers.

If you believe your bank or mortgage servicer has taken advantage of you through a force placed insurance policy, contact Maney | Gordon for a free consultation at 1-866-344-LAWS (5297).