From the FINANCIAL TIMES:
…The leaker’s information relates primarily to “force-placed insurance” — insurance taken out by a mortgage servicer on a home when the homeowner doesn’t maintain the level of insurance required by the loan — and the role of Balboa Insurance in that industry.
Force-placed insurance is such a problem that the proposed bank settlement on improper foreclosure and loan-servicing practices currently in the work contains many “shall nots” regarding it, including such things as: Thou shalt not buy force-placed insurance, charging a borrower and taking borrower’s money from escrow to pay for it, when borrower already has an insurance policy in place.
Felix Salmon details the kind of scams involved, discussing reporting by Jeff Horowitz at American Banker, including these examples:
“A homeowner had a $4,000 insurance policy, which was paid by the loan servicer, Everbank, from an escrow account. But Everbank allegedly let that insurance policy lapse, allowing it to replace the policy with a different policy, this one costing more than $33,000. The insurer, a subsidiary of Assurant [the market leader ahead of Balboa], then paid Everbank a $7,100 kickback for giving it such a lucrative policy. And, writes Horwitz, ‘left the door open to further compensation’ down the road.”
Click here to read the full article.
