Chimicles & Tikellis is currently investigating mortgage companies and banks regarding alleged abuses of forced-placed insurance (also known as lender placed insurance). Normally, mortgage agreements include a promise to maintain a homeowner’s insurance policy on the property being mortgaged. Many people don’t realize that if they allow a homeowner’s insurance to lapse, banks and other lenders can legally re-insure the mortgaged property by obtaining homeowner’s insurance to replace the lapsed policy and forcing the homebuyer to pay for it.
A lapse in coverage can occur for a variety of reasons, including the failure of mortgage servicers to pay for homeowner’s insurance out of funds already placed in escrow by the homebuyer. When this occurs, it may result in the mortgage servicer imposing whatever homeowner’s insurance it so chooses, usually at a substantial increase in cost to the homeowner over the previous policy. In addition to being more expensive than a policy most homeowner’s could purchase independently, lender forced insurance policies almost always offer the homeowner less protection, usually just insuring the amount of the loan rather than the value of the home. The increased cost of forced-placed insurance also adds to the homeowner’s debt obligation and can result in an increase in monthly payments.
If you were subjected to force-placed insurance please contact the attorneys for this case via the “Email us about this Case” button, below.
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