Ask Me Help Desk - Foreclosure - Forced Homeowner's Insurance

I recently tried to provide advice to a lady whose home will be sold at Trustee Sale on August 24, 2007. She is down about 8 months, and the lender placed their own insurance on the property to protect their interest. She has no escrow account and allowed her policy to lapse about 4 months ago. Her premium was under $700/year. A mutual friend is trying to bail her out thrugh a cash purchase. In reviewing the papers from the lenders foreclosure agent I saw what looked like serious overcharges. The title company handling the proposed purchase found that the "forced" insurance premium worked out to about $6,900/year. While it is expected that lender provided insurance will be more expensive, this $6,900 figure is pure rape. My escrow officer confirmed that premiums in this range are common.

As we all know, the Mortgage Industry is going through a melt down, with the potential of bringing down the entire economy. This situation is the fault of the Mortgage Industry, which allowed anyone with a pulse to get a loan, and the raft of Disneyland loans that were foisted on unsophisticated borrowers. More borrowers will default, and many will lose their homes. Such rapaceous charges for forced insurance will just make the situation worse, and will prevent many borrowers from reinstating their loans, who otherwise might have.

If there are any of you who work in the foreclosure department of a Mortgage Servicer, or for an attorney who handles foreclosure, or some other job where you would have first hand knowledge of such overcharges, please post a reply. I am trying to find out if this is standard practice just in AZ or nationwide. I am ready to jump on my white steed and joust at windmills.

Quote:

Originally Posted by Dr D

I recently tried to provide advice to a lady whose home will be sold at Trustee Sale on August 24, 2007. She is down about 8 months, and the lender placed their own insurance on the property to protect their interest. She has no escrow account and allowed her policy to lapse about 4 months ago. Her premium was under $700/year. A mutual friend is trying to bail her out thrugh a cash purchase. In reviewing the papers from the lenders foreclosure agent I saw what looked like serious overcharges. The title company handling the proposed purchase found that the "forced" insurance premium worked out to about $6,900/year. While it is expected that lender provided insurance will be more expensive, this $6,900 figure is pure rape. My escrow officer confirmed that premiums in this range are common.

As we all know, the Mortgage Industry is going through a melt down, with the potential of bringing down the entire economy. This situation is the fault of the Mortgage Industry, which allowed anyone with a pulse to get a loan, and the raft of Disneyland loans that were foisted on unsophisticated borrowers. More borrowers will default, and many will lose their homes. Such rapaceous charges for forced insurance will just make the situation worse, and will prevent many borrowers from reinstating their loans, who otherwise might have.

If there are any of you who work in the foreclosure department of a Mortgage Servicer, or for an attorney who handles foreclosure, or some other job where you would have first hand knowledge of such overcharges, please post a reply. I am trying to find out if this is standard practice just in AZ or nationwide. I am ready to jump on my white steed and joust at windmills.

Yes I am a homebuyer counselor and forced insurance is charged at the rate is charged the borrower has already defoulted so there is nothing she can fight I have seen insurance at those reates before

Since us taxpayers will probably have a bigger mess to clean up than the Savings & Loan problem of the late 80s, it might be time for concerned citizens to contact their respective State Insurance regulators and/or government representatives, and try to put an end to this larceny.

As it is forced insurance the borrower always has the option of obtaining their own insurance and paying outside the loan, I am not sure you can do much about that one
As you will remember the insurance industry also experienced a great deal of changes 4 years ago approx. There are so many issues where I would love to see the people really take a stand and create change, but most people only talk about it, someone would have to try to lead a "revolution" per say so we can see any chang on anything any more

Quote:

Originally Posted by Dr D

I recently tried to provide advice to a lady whose home will be sold at Trustee Sale on August 24, 2007. She is down about 8 months, and the lender placed their own insurance on the property to protect their interest. She has no escrow account and allowed her policy to lapse about 4 months ago. Her premium was under $700/year. A mutual friend is trying to bail her out thrugh a cash purchase. In reviewing the papers from the lenders foreclosure agent I saw what looked like serious overcharges. The title company handling the proposed purchase found that the "forced" insurance premium worked out to about $6,900/year. While it is expected that lender provided insurance will be more expensive, this $6,900 figure is pure rape. My escrow officer confirmed that premiums in this range are common.

As we all know, the Mortgage Industry is going through a melt down, with the potential of bringing down the entire economy. This situation is the fault of the Mortgage Industry, which allowed anyone with a pulse to get a loan, and the raft of Disneyland loans that were foisted on unsophisticated borrowers. More borrowers will default, and many will lose their homes. Such rapaceous charges for forced insurance will just make the situation worse, and will prevent many borrowers from reinstating their loans, who otherwise might have.

If there are any of you who work in the foreclosure department of a Mortgage Servicer, or for an attorney who handles foreclosure, or some other job where you would have first hand knowledge of such overcharges, please post a reply. I am trying to find out if this is standard practice just in AZ or nationwide. I am ready to jump on my white steed and joust at windmills.

She can get her own insurance and then cancel the forced Insurance.