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!