Friday, March 25, 2011

Force Placed Insurance

Force placed insurance is an insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset.  The charges for this insurance are passed on to the customer.

The problem is that many consumers/homeowners have a policy in place and they inadvertently ignore mortgage company letters that ask for verification of their coverage, not good!

This process of "checking for coverage" as described below in the article seems innocent, but can plague a consumer if you ignore the mortgage request.  I have seen it happen to my clients!

So, if you have coverage, you need to respond to the letter.  If you are confused about the request or how to reply, speak to a consumer lawyer right away.  The failure to respond could lead to charges on your mortgage statement that are very costly.  This is because the insurance company's policy is usually not purchased competitively and these costs get passed on to you.  I have seen polices that are double!  This over billing may trigger a wrongful foreclosure for homeowners who are current on their payments.  This is another deceptive mortgage practice that has to be carefully monitored!

Friday, March 11, 2011

Reverse Mortgages

This article from The New York Times highlights some of the problems related to reverse mortgages.

The lawsuit here alleges that HUD made rule changes that allowed underwater homes with reverse mortgages to be sold for less than the full mortgage balance so that heirs or spouses are unfortunately left having to satisfy the full mortgage balance later on!

I have been warning my senior citizen clients for several years now about some of the dangers of reverse mortgages.  One of the issues to be aware of is how long you will stay in the house.  In many cases, these loans only make sense if you will be in the home for a number of years.  Some experts say that if you will move in less than 7 years, these products are too dangerous.

In our practice, where we regularly see clients who owe so much more than their mortgage loan balance, it is even more important than ever to evaluate these transactions, and with counsel in most cases.

Please let me know what your thoughts and questions are!

Lee M. Perlman, Esquire

Wednesday, March 2, 2011

Debt Collectors

As I write this, I continue to observe some very challenging financial times for both our clients and all New Jersey consumers, especially as it relates to debt collectors.

New alarming data suggests that 1 in 3 working families is near poverty.  One recent article described some of the extreme collection tactics presently being used by the IRS against those really struggling to pay their taxes.  The IRS has also increased the number of liens they are filing, often in situations where collectability is both difficult and questionable for the taxpayer.  Another recent disturbing article described a collection agency that set up bogus court rooms, complete with fake judges to trick consumers into paying debts!  Reading this story really disturbed my sense of fairness as a lawyer and advocate for those who are really struggling in these tough times.

It is important to have all collection paperwork, both legal and non-legal carefully reviewed to evaluate what in some cases may be both illegitimate and fraudulent.  We are happy to answer any questions you have.

Let me know what you think about this.

Lee M. Perlman, Esquire