Forced Placed Insurance Causes Unit Owner's Mortgage Payment To Skyrocket After HOA Drops Windstorm Coverage; Suit Filed Seeking Reimbursement

In Oakland Park, Florida, The Miami Herald reports:

• Carla Gemmati, 45, a resident at the Lake Pointe Condominium in Oakland Park, saw her mortgage almost double from $975 to $1,700 in December. The additional cost was to cover a windstorm insurance that her condominium's association had just eliminated,(1) forcing her mortgage lender, Bank of America, to purchase a policy of more than $4,500 on her behalf and charge the cost against her monthly mortgage payment. "I haven't been able to make the whole payment,'' Gemmati said. "If I can't make the payments, I foresee that [a foreclosure] can happen.''

• Windstorm insurance coverage is mandated under Chapter 718 of Florida Statutes, or the Condominium Act. According to the law, insurers issuing residential property insurance policies, in this case the condominium's association, are required to include hurricane windstorm coverage. In February, Gemmati filed an unprecedented lawsuit against the condominium association and members of its board in order to regain the windstorm coverage and get reimbursed for the price hike in her mortgage.

• The lawsuit states that, "the defendants intentionally refused to obtain and maintain adequate insurance, specifically windstorm coverage.'' Robert Kaye, a managing member of Kaye & Bender in Pompano Beach, is representing Gemmati, who is a collection specialist in the same firm. "Florida Statute and the declaration of the condominium require the association to provide a certain level of insurance for the buildings and that includes the windstorm insurance,'' Kaye said.

• Gemmati has been living at the Lake Pointe Condominium for five years. Up until last September, the windstorm coverage was provided by the association and included in the $375 fee homeowners paid each month to the association. "All the insurances are supposed to be included,'' Gemmati said.

For the story, see Lawsuit targets wind insurance.

(1) I suspect that this condo association, like many throughout Florida, is getting stiffed left and right by delinquent unit owners on their monthly maintenance payments (many facing foreclosure), and the association is simply looking for a way to cut expenses without having to jack up the monthly fees on the fee-paying owners. Such an increase may serve to push some of those owners into the delinquent category.