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Force-Placed Insurance & Banks


Banks, lenders and loan service providers face force-placed insurance lawsuits alleging their force-placed insurance pushes already financially-burdened home owners into greater financial crisis, putting them at risk of foreclosure. Furthermore, allegations have been made that force-placed home insurance is much more costly than traditional home insurance and could be a conflict of interest for some financial institutions.

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Forced-Place Insurance Complaint

force_placed_bank_insurancepageAccording to Bloomberg (05/06/12), banks and mortgage services have agreements with insurance companies to buy policies on behalf of a homeowner whose insurance coverage has lapsed. The bank forwards the premium to the insurer, the insurer pays a commission to the bank and the homeowner is billed for the premium and commissions. Bloomberg notes that premiums on force-placed insurance were in excess of $5.5 billion in 2010.

Forced-place insurance allows banks and lenders to protect their interest by allowing them to put insurance on a property that they have a mortgage on. Critics say that once the financial firms realized there was profit to be made in force-placed insurance, financial institutions formed their own specialty insurance companies, so they could offer force-placed insurance on properties without insurance coverage.

Some regulators, including in New York and California, argue that the percentage of premiums paid on claims are lower than insurers said they would pay out. Although insurers reportedly estimated a loss ratio of 55 cents on the dollar, they actually pay out about 20 cents on the dollar.

Furthermore, some critics argue that force-placed policies have less protection than cheaper policies and the policies usually protect the lender, not the homeowner. Finally, there have been complaints that servicers are not removing the force-placed insurance quickly enough. Once a homeowner shows proof he has other insurance coverage on his house, the force-placed insurance should be removed, but critics argue that the removal is happening too slowly.

Many consumers whose insurance coverage has lapsed are already at risk of having their home foreclosed on; their insurance lapses because they cannot afford it. Critics of force-placed insurance argue that the coverage is so expensive, it further pushes homeowners into financial crisis, increasing the risk of foreclosure. They state that if the cost of force-placed insurance reflected the actual pay out, the financial burden on homeowners would be reduced.

Forced-Place Insurance Lawsuits


Force-placed insurance lawsuits have reportedly been filed against banks, lenders or loan service providers for force-placed mortgage insurance. The lawsuits allege consumers are charged excessive and unreasonable premiums for their force-placed insurance. Plaintiffs argue that force-placed insurance policies cost up to 10 times more than traditional homeowners insurance. Meanwhile because banks have set up their own specialty insurance affiliate companies, there are concerns that the financial institutions are involved in a conflict of interest. Finally, there are allegations that unrelated companies may have offered kickbacks for forced-place insurance policies.

Force-placed insurance lawsuits allege that financial firms impose onerous force-placed insurance contracts, requiring property protection where none was previously required. For example, one force-placed insurance lawsuit against a financial firm argues that the defendant charged borrowers for flood insurance at almost 10 times the market rate even though flood insurance had not been required from previous insurance providers.

According to The New York Times (01/10/12), JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are being investigated by the New York State's Department of Financial Services. The same article notes that one investigation involves a homeowner who paid $2,000 for home insurance to State Farm, but wound up paying $6,000 a year in forced-place insurance.

Force-Placed Insurance Bank Legal Help

If you or a loved one has suffered damages in this case, please click the link below and your complaint will be sent to a Force-Placed Insurance Bank lawyer who may evaluate your claim at no cost or obligation.

Last updated on May-8-15

FORCE-PLACED INSURANCE AND BANK LEGAL ARTICLES AND INTERVIEWS

Wells Fargo Hit with Force-Placed Insurance Lawsuit
Wells Fargo Hit with Force-Placed Insurance Lawsuit Stamford, CT: Wells Fargo and Assurant face a force-placed insurance lawsuit alleging the financial firms artificially inflated force-placed insurance premiums charged to homeowners. The two companies are the latest in a line of financial institutions alleged to have charged excessively high rates for force-placed insurance - also called lender-place insurance [READ MORE]

Force Placed Insurance Defendant Attempts to Toss Lawsuit, Plaintiffs Have None of It
Force Placed Insurance Defendant Attempts to Toss Lawsuit, Plaintiffs Have None of It Minneapolis, MN: As lawsuits go, most defendants will attempt to dismiss a case whether or not a dismissal is even meritorious to begin with. Such is the case with a Lender insurance lawsuit brought by various homeowners against US Bank and American Security Insurance Company (ASIC), a subsidiary of Assurant Inc. The plaintiffs, respectfully, hold that any attempt to dismiss their lawsuit is premature [READ MORE]

Defendant Hit with Yet Another Force-Placed Insurance Lawsuit
Defendant Hit with Yet Another Force-Placed Insurance Lawsuit Philadelphia, PA: Less than a month after insurance giant Assurant Inc. and HSBC Bank settled a Lender insurance lawsuit for $1.8 million, a subsidiary of Assurant and PNC Bank were hit with another Force-placed insurance lawsuit alleging inflated premiums and kickbacks in violation of the Racketeer Influenced and Corrupt Organizations Act [READ MORE]



READER COMMENTS

Posted by
Ohio
on
Wells Fargo forced-placed flood insurance in excess of my current policy that more than covered their interest in my home. This has more than doubled the cost of my flood insurance. $88,000 loan that was sold to Wells Fargo at that time they forced-placed $230,000 in flood insurance. I already had $100,000 in flood insurance coverage thru State Farm. They keep raising my monthly payment on my house; my house payment is $410/ month. After all escrow, my house payment is now in excess of $1,100 per month with forced-placed insurance. Day I purchased home, flood insurance was $434 per year. Current policies including forced-placed insurance is now at over $4,000 per year for flood insurance. I am about to lose my home due to the increased costs associated with this flood insurance.

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