NY Times | Forced Placed Insurance ONE of the Richest and Most Secretive Sources of Profit

“There is a lot to love about force-placed insurance — if you sell it. The policies typically cost at least three times as much as ordinary property insurance. Some borrowers have been charged much more — up to 10 times the prevailing rate”


Hazard Insurance With Its Own Perils


“Force-placed insurance appears to be the dirty little secret of the mortgage industry,” Mr. Lawsky said in an interview last week. “It is a silent killer harming both consumer and investors while enriching the banks and their affiliates.”

Representatives of PNC and JPMorgan Chase declined to comment. Mark Rodgers, a spokesman for Citigroup, said the bank was working with Mr. Lawsky’s office. “CitiMortgage does not sell homeowner’s insurance to consumers,” he said. “If a homeowner does not provide an insurance policy, CitiMortgage secures a policy to protect the interest of the investor. Whenever the homeowner submits proof they have obtained insurance on their own, the lender-placed insurance is canceled.”

A spokesman for Morgan Stanley said its mortgage company “does not have an affiliated agent, broker or insurance company to procure force-placed insurance.”

Force-placed insurance has exploded during the foreclosure crisis. Once a backwater that generated $1 billion a year, it is now a $6 billion-a-year business. Much of its growth has come on the backs of homeowners.

Full article here…



10 Responses to “NY Times | Forced Placed Insurance ONE of the Richest and Most Secretive Sources of Profit”
  1. Ali says:

    What a buch of asholes. How many times is legal to feep collecting insutance on one property? Sounds like insurance fraud to me. I have proof that my loan was paid off twice by force placed insurance and I have had the same insurance for 6 years. My insurance Co. has assured me that the bills wills will be sent directly to me. Ans don’t forget they have access to the County Recorders office and they know who owns the loan. Next I am going to ask for a lower rate as my records and credit report records show my loan payed off. New souce of info for me. my insurance co. Want to know who owns your loan ask your agent. They know.

  2. Wake Up America! says:

    Kudos to Gretchen Morgenson for bringing the evils of foreclosure fraud to the mainstream media. She is one of only a few writing about an industry rife with fraud and does so on an almost weekly basis.

    The one thing I wish she would have touched on is how banks work things so that force-placed insurance is your only option. In my case, a call about the possibility of an interest rate reduction/modification resulted in a “drive by” BPO (broker priced opinion). Whether by mistake or design (I’ve come to believe it was by design), my property was reported as “vacant” and my insurance carrier immediately notified (although the letter from the servicer advised I had 30 days to dispute the finding or provide proof my policy covered vacancy). My carrier promptly dropped me and my servicer used this maufactured vacancy as their reason to start foreclosure proceedings on a current loan. Once in foreclosure, no carrier will touch you with a ten foot pole.

    The servicers are utilizing software programs created by the credit bureaus (Equifax, Experian & Trans Union) that can “predict” when a homeowner will strategically default. A call to your servicer about a modification or heads-up about a possible late payment when your loan is current is a major red flag. The servicers then use this red flag as a means to gouge you (i.e. $250 for a BPO) or worse yet, take your home.

    Even though I provided copies of current utility bills, had another “inspector” verify the property was occupied, hired a lawyer and filed a complaint with the OCC my servicer still had the balls to notify me of yet another vacancy several 6 months after the first. Instead of doubling, this time the cost of the force-placed insurance quadrupled. The servicer also increased the amount of insurance on my house by over 40%. Not only is this fraud – it is outright thievery.

    I just read where Obama is going to make housing and the foreclosure crisis the focal point of his upcoming State of The Union Address. What do you want to bet that an agreement between the banks and all the state AG’s is hammered out at the last minute? I hate to be cynical but I just believe the calvary is coming.

    • Wake Up America! says:

      Sorry – meant to say that I don’t believe the calvary is coming.

      • lvent says:

        We The People are the calvary…the corrupt Government is not going to save us….Revolt on everything…screw them and their manufactured straw poll results…they want to give us 2 choices for president?..its all a scam to make us think we have choices…..we don’t…when the 2012 elections arrive…..WRITE IN YOUR CHOICE..Why make it easy on them?

      • lvent says:

        If people were really awake the wouldn’t show up for the straw man poll…

      • lvent says:

        Then what would they do?…The media would be screwed….they couldn’t lie about manufactured poll results…

  3. Fred Grant says:

    Another part of the FIRE sector that’s built to extort profit from homeowners. Like the Banksters, the insurance hustlers are good friends of the current corrupt administration. We cannot take this lying down, first up is making sure the foreclosure administration doesn’t get relected, the replacements are all equally corrupt and take their moneyh from the same entities. In other words, the game is rigged. Kudos to the writer who is suing Obama for NDAA. They’ll break the law to take your house, they will do the same thing to throw you in jail if they aren’t stopped.

  4. pamelag says:

    GMAC (duetsch,homecoming,ally) forceplaced Balboa (whom they own) insurance on me, altho i had plenty of my own…,paid my ins out of escrow, the next day charged $4k to my escrow, of course i lost. they all were aware of it, i sent my file to the Attorney General 3 times til i realized she was just keeping me busy. God Bless us All.

  5. Tien says:

    I in CA Riverside the New house I bought in 2006 from the builder $420,000.00 and in 2009 Citimortgage Appraisal for short sale $185,000.00. but the deal didn’t go through. I had pay Insurance on my own for $1,090.00 and 2010 the Citimortgage, inc want to foreclosure so I filed Bankruptcy but I see judge Granting to leaf of Automatic Stay, so I filed the State Court Complaint MERS, and SERVICER, I see I maybe I do not win so I am stop paying Insurance. on June 2011 the Citi. send to me the letter that they are had done caring Ins for $3,900.00 it is over 3 time than the year before I got from some one else. Citi. said I must pay I wonder what I should do to preventing that, also I didn’t pay for County Tax last year it was from original one year $5,200.00 and it is now county had included Penalty so it go up to $7,900.00 sure it is to much I thing every one make money on me I still fighting in Court but I am got scare because I do not know how to do rediscovery. MERS request for Deposition of me on the April 02, 2012. is any one know some one had done a discovery in CA in Pro- Per please send it over to my Email mckitie@gmail.com I would deeply appreciated that
    I see County Make money and Lender and servicer form the dead beat home owner. I can feel that I will loosing the house but I am not give up I am still fighting to an end Thank You Lisa and Mike for you put this site up so we could share.

  6. Beth A. says:

    The insurance industry laps up those commissions, too.

    I tried to reinstate coverage on our large property — had only lapsed a few months. They supposedly had to send out a person to inspect the structure, etc. Had to come inside, etc. Yet, the bank could force place insurance w/the same company without an inspection and much to our surprise. They must just write/call the insurance agency and the agency signs ’em up and collects their large commission.

    The bank insured the property for over a million….just over what we had on it previously – but of course, the property is probably now only worth $500-$600k.

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