“Both borrowers and the investors are the customers of the servicers,”

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“In what other industry do companies treat the customers in this manner?”

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This is a HUGE reason for “manufactured foreclosures”.  We see this one all the time.  Many NACA attendees are victims of forced placed insurance.  There is a big story here on how both the homeowners and the investors are the marks for yet another banking industry tainted product.

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Losses from Force-Placed Insurance Are Beginning to Rankle Investors

Before servicers force-place insurance, they often warn homeowners that the policy is costly, offers poor coverage and is likely to benefit the servicer. The investors who often end up paying for that same policy don’t benefit from the same notice.

They may be catching on all the same. Recent rumblings suggest mortgage investors may soon begin to challenge widespread servicing practices related to force-placed insurance.

Inattentiveness to servicing minutiae cost investors little during the housing boom, when rising property values allowed servicers to charge borrowers high delinquency-related fees while still recouping investors’ full principal through refinancings and foreclosure sales.

But the torrent of borrower defaults after the bubble burst has changed the stakes. Because servicers repay themselves for the cost of force-placed insurance with part of the proceeds of foreclosure sales, investors end up paying for the pricey policies through greater loss severities.

At a mortgage backed security investor conference last month, Amherst Securities analyst Laurie Goodman argued that Bank of America’s ownership of a force-placed insurer, Balboa Insurance, had contributed to the bank’s torpor in clearing out hopelessly delinquent loans. The delay added up to taking money from investors’ pockets, she said. “Bank of America force-places insurance at a much higher rate than market rate,” Goodman told a crowd composed largely of investors. “It would make sense that [it] would be much slower to liquidate, and in fact they are.”

Force-placed insurance is one of numerous areas in which investor and homeowner interests are aligned…

Rest here…

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4closureFraud.org


I sure could use some…