According to The Recorder (Greenfield, Massachusetts 1/11/16), a fire started in Amanda Pitchford’s bedroom in the night following a quick trip to the washroom. Pitchford is reported to have habitually left a candle burning, although it was unclear if the candle was the source of a fire that began within the linens of her bed.
Returning to her room to find her bedsheets in flames, Pitchford did her best to douse the flames with a fire extinguisher she had at the ready. However, it was reported that the plumes of foam succeeded only in spreading the flames to a tapestry that hung above her bed.
Firefighters are reported to have arrived within four minutes, but to no avail: the two-story wood-frame structure was devastated by the fire. It was reported that she had no insurance coverage for contents.
What Pitchford did have, however, was a Lender Insurance policy on her home, a Force-Place Insurance policy implemented by Ocwen Financial. Pitchford did not divulge the circumstances behind the need for the forced-placed insurance terms, but The Recorder did note that the homeowner’s premium was set at $2,251 per year.
Thus, it was with surprise when Pitchford learned that in spite of a high premium, her force-placed insurance coverage did not include any of the standard benefits for emergency clothing and shelter reimbursement, personal property damage, or tenant relocation coverage.
The Recorder took note of the $140 million settlement Ocwen was mandated to pay by a federal court in Florida following a Force-Place Insurance class action in 2015. Ocwen was accused of inflating the cost of forced-placed insurance premiums.
That settlement is indicative of the state of the forced-placed insurance industry, which has been at the receiving end of Forced-Placed Insurance Lawsuits and related settlements amidst allegations that insurers and mortgage underwriting companies have cozied up in a scheme involving kickbacks and other incentive payments that are borne on the backs of unsuspecting homeowners, or so it has been alleged.
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However, there have been wide allegations - supported by lawsuits - that Lender Insurance policies are more expensive, with less coverage than standard-issue policies. It is alleged that premiums are inflated, with kickbacks and other payments borne on the backs of unsuspecting homeowners.
Plaintiffs have alleged that force-placed insurance terms have included coverage that wasn’t necessary or exceeded the mortgage company’s investment.
It is not known if Pitchford has filed a Force-placed insurance lawsuit…