NY Times | Forced Placed Insurance ONE of the Richest and Most Secretive Sources of Profit
Posted by 4closureFraud on January 22, 2012 ? 9 Comments?
?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?
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Hazard Insurance With Its Own Perils
By GRETCHEN MORGENSON
?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?
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Filed under bankruptcy, cdo, cds, Corruption, Fannie Mae, foreclosure, Foreclosure Fraud, Foreclosuregate, freddie mac, MERS, mortgage electronic registration system, Mortgage Fraud, securities fraud
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