Forced Placed Insurance Leads to Fraudclosure, Attorney Calls it a Case of Fraud

Forced insurance leading to foreclosure

HERNANDO BEACH – Thousands of people in Hernando County are being forced into foreclosure because of what banks call “force placed insurance.” But some homeowners and their advocates call it fraud, and they are fighting back.

At issue is homeowner’s insurance. If a homeowner doesn’t pay it, the bank will buy insurance and bill the homeowner. In Hernando County, where sinkholes are rampant, insurance rates have skyrocketed.

It has left people like Joyce Wogan vulnerable. Wogan pays her mortgage on time every month, but she just got an ominous letter from the bank. . It read in part “….your current flood insurance doesn’t meet the minimum required amount. We’ve purchased temporary insurance to protect our investment in the property.”

Here’s the problem: Wogan’s annual insurance premium went from rough $1,500.00 a year to more than $7,000.00.

Wogan’s attorney calls it a case of fraud.

Check out the rest here…


18 Responses to “Forced Placed Insurance Leads to Fraudclosure, Attorney Calls it a Case of Fraud”
  1. Steven says:

    My lender Wells Fargo let my policy lapse for non-payment, even though the insurance company was their own subsidary and I had never missed a single payment. They then placed forced placed insurance on my account. I called because I had never missed a payment and they said it was a glitch and would take care of it. Instead they left the forced placed insurance policy in effect, increasing my payments by over $200 per month. I continued trying to get it solved for an entire year, never missing any payments. Finally I fell behind because of the increase and they are now foreclosing. I am arguing fraud. In class action lawsuits around the country they are being sued for placing outrageously high premiums for basic insurance. This is in cases where the home owner let their policy lapse for non-payment. At no time did I ever miss a single payment, yet they let my policy lapse for non-payment and shoved a force placed policy on my account. Have a hearing the 5th of July and will update after the hearing.

  2. SBInsured says:

    “See”, let’s think hypothetically for a minute. For whatever reason you don’t pay your insurance premiums. The insurance company sends you a cancellation notice which you either ignore or are legitamately having a financail hardship and cannot afford to pay the premiums. Either way the policy cancels. The lender notices that your policy lapses and add a policy to cover their loan balance. The next week your home burns to the ground while your family is away. Not an intential burning of course. No personal loss but the house is destroyed. Now you have no home and still owe the bank the full loan amount, let’s say $100,000. In all your grief, the lender sees the tradegy on the local news. They put two and two together and call you to tell you that a policy was added to your loan balance. They go on to explain that 51 of 52 weeks of premium will be refunded, so you may owe $30 for which the insurance carrier will now pay off your $100,000 loan balance. Would you still be upset that the lender placed a policy on your loan?

    • see says:

      I understand completely what you are saying. What I am saying is if I am paying both my insurance and taxes and my homeowners policy more than covers the house and contents in the house, the bank has no right to force their insurance on me, because I am abidding by the terms that I signed at closing. If the bank says I have no insurance then they did not read the docs. Wells tried to force place insurance on me when I had paid my policy on time. They refused to believe that I had insurance and it took awhile for these idiots to back off. My insurance agent got involved and it still took awhile. Then they said I needed flood insurance when my the paperwork said I was not in a flood zone. My house is on a hill and the only way my house would ever be flooded is if there was another flood that requires a Noah’s ark. I have read time and time again about homeowners who lost their homes because the banks decided to place insurance on homes when the homeowners were paying their premiums. I know first hand how unreasonable these people can be and it is all unnecessary. When your insurace agent calls and sends documentation and they still insist you are not insured, can you tell me who is at fault here?

      Like is said, if I didn’t pay my premiums then they have a right to force place insurance on me. Other than that no way.

  3. SBInsured says:

    Please refer the loan agreement and or agreement to provide insurance documents your lender provided at closing. The required insurance and default remedies are explained in detail in these docs. If you are not providing the insurance described in the loan documents then do it. If you are, then the lender should fully refund any amount they have charged you.

    • see says:

      The problem here is that people who do not have escrow accounts and pay their insurance and taxes on their own are the ones who are having problems with the banks. The BANKS are the ones who should be READING the loan docs and should honor that and it seems that they are NOT. Of course, if I don’t pay my insurance then I should expect them to put inforce a policy with outrageous premiums.

  4. pamelag says:

    gmac (ally, duetsch, homecoming) forced placed ins on me with balboa, whom they own. 3 months after they ‘bought’ my loan when the trouble started. i had plenty of my own ins, they wacked my escrow $4,000. started out pro se, hired a lawyer, (who vanished). the judge covered his ears and i lost my home. God Bless Us All.

  5. Granicus says:

    The bank/servicers get kickbacks on these up priced policies. Just another honey pot for profit.

  6. see says:

    In late 2006 my servier changed to Wells Fargo. They started sending us letters that we were not insured and if we did not get insurance they would have no choice but to find coverage for us. Words to that effect. I called Wells and said that they were mistaken. We had our house since l987 and always had Allstate as our insurance company and our coverage was way more than adequate. Lady denied that there was any info about insurance, so I read to her our policy info and also per her request faxed her a copy of our policy. I called my insurance ageny and told him about what was going on and he was not surprised. He said Wells was known for that. My insurance agent also sent the info to Wells. Problem solved–NO WAY. Got a nasty call from someone at Wells. Told her this was crap and I advised her to call my insurance agent and also informed her our insurance agent had sent proof of insurance. After arguing with me for several minutes, she finally said she’d call the agent. I also told her if she did not correct the file I was going to complain to the insurance commisioner. Never heard from them again about the insurance.

    Oh yah, she also stated we needed flood insurance, told her she was crazy for simple fact that I lived up a hill a hill and I was definitely not in a flood zone nor near any water. My loan papers stated flood insurance was not required. Bunch of F’n idiiots.

  7. Imanda Waldon says:

    We had forced placed insurance because for us it was cheaper than other policies in the State of Florida. After Huuricane Dennis we notified the insurance company of a leaking roof. Not only did they threaten to lock us up for fraud if we went forward with a claim; they denied the claim stating our shinges were 22 years old and only warrantied for 20 years. The Insurance Representative was very rude, forceful and demeaning. I called the mortgage company to let them know what happened and FOUR years later, we paid cash to have a new roof own our house. Folks just cant win!

    • Michael says:

      Are you saying that the forced placed insurance refused to pay after a hurricane?

      I’ve been trying to put together FPI stories and yours is the first I’ve heard of where somebody actually submitted a claim. Would you mind telling us more about it?

      • Imanda Waldon says:

        Yes Sir, Forced Placed Insurance denied our claim and was very threatening about us pursuing a claim. The represenative had me apologizing for filing a claim. He scared me so bad, we did not pursue. The forced place insurance is through CitiMortgage. We have been fighting for about 67 months, has cost us over $70,000.00 and they are trying to foreclose again. They said we didint pay enough…….get that. If you would like to hear our story; give me your phone number and I will call you.

      • Michael says:

        Please write to me at olenick -at-

        I’ve actually never heard of anybody actually making a claim on a forced placed insurance (FPI) policy, and would love to learn more about what happened.

  8. Michael Olenick says:

    FPI is insurance fraud, plain and simple. Even in cases where people don’t have insurance, it should cost banks less to purchase a policy, because they’re buying them in bulk whereas homeowners as buying one at a time. Further, they almost always insure a house for the full value of the note, despite that they know the price of the house dramatically declined, and that even in the event of a catastrophic loss the land would still be there.

    Insurance fraud is a crime in every state. Try purposefully over-insuring a property then making a claim and you’ll find yourself in prison. Even lying to an insurance company — for example by overstating the value of an asset — is a crime in every state I know of.

    I’ve always thought FPI was robogate, the follow-up, but with a much higher likelihood of prosecutions and convictions. Let’s hope that time has finally come.

  9. Van Curtis says:

    Chase has placed insurance on one of my properties. I was paying less than $1000/year. Their policy is $4,669. Assessvalue of the property is $204K, they have it insured for $300K.

    Contacted the FL Insurance Commissioner. The state does not have any authority over the national banks. In the process of filing a fraud complaint with the “Controller of Currency of National Banks.” Visit their website.

    • WakeUpAmerica! says:

      BoA did the same thing to me. Used an erroneous “vacancy” report as reason to notify my carrier, who promptly dropped me. They also used this (fabricated vacancy) to start foreclosure proceedings even though my loan was current. No other carrier would touch me with a pending foreclosure.

      Premium went from $800 to $1500. Of course, my personal belongings were not covered – just the dwelling. They used another erroneous vacancy report a couple months later to raise the premium to well over $4,000. They also increased the amount they were insuring the dwelling for by 35%.

      Wake up America! In many cases, banks are pursuing fraudclosures to generate bogus fees (and steal equity).

  10. housemanrob says:

    ….the banks were trying to force place insurance on all of my properties……….way back in 2000 and 2001… of the reasons I had to sell them all…….thousands of hours working on these investments…… back what I paid for them……..but lost close to 10 years of profit….leaving me no income in the black for that 10 year period……leaving me very little of anything…tragic….

    • CaitlinO says:

      Can I ask what excuse they used to do this? I’m not clear on how this works. If you already have a policy, how can they force you to buy theirs?

      • housemanrob says:

        Caitlin……..they sent letter after letter, stating that they had no proof of insurance…..yet they knew I did……..than when sending in proof they would say they never got the paperwork… the merry-go-round would begin……I would spend hours trying to straighten it out……being trusting and ignorant to this scam back then. Finally, ONE OF MY SERVICERS, AURORA……..went too far and not being stupid……I started telling these servicers that if they did not cease to do this, that I would simply pay off the loan…..well….they did not want that so they would stop harrassing me immediately……I think that is the last thing they want…. one reason being…who was going to give me a mortgage satisfaction…when I sold my house at Lake George, N.Y. IN OCT 2009…… I checked the public records and found out NONE had ever been filed….and to this day! I feel sorry for the new homeowner….for he has a severely broken chain of title……oh well…not my fault.

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