Home > Force Placed Insurance > Exorbitant Insurance Policies Tipping Homeowners Into Foreclosure

Exorbitant Insurance Policies Tipping Homeowners Into Foreclosure

 

Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.

The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.

 

Read the Entire Article: Exorbitant Insurance Policies Tipping Homeowners Into Foreclosure.

  1. May 8, 2012 at 5:54 pm

    As I recall, one of your own clients, prior to being your client, was forced to take PMI, private mortgage insurance, because their down payment was less than 20%. When a car accident
    that was not even their fault caused them to be late on a payment, the PMI kicked in and the bank attempted to foreclose on the homeowners.

    So besides overcharging for mortgage insurance, it appears that if one makes a smaller down payment, they can be forced to take PMI which can trigger a foreclosure action if they are late or fall behind with their payments.

  2. June 30, 2013 at 9:16 pm

    Hi! I’m at work surfing around your blog from my new iphone 4! Just wanted to say I love reading your blog and look forward to all your posts! Keep up the outstanding work!

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