Texas Couple Claims Lender Screw-Up In Paying Homeowners' Insurance Premiums Out Of Mortgage Escrow Funds Left Them "Naked" During "Ike" Pounding

In Jefferson County, Texas, The Southeast Rexas Record reports:

• A Hardin County couple claim their Dallas-based mortgage company failed to pay homeowners and windstorm insurance premiums out of the monthly mortgage payments the couple made, causing the insurance company to refuse to pay for damages the couple sustained to their property from Hurricane Ike.

• Eanest Edward and Joseph Ann Jones filed a lawsuit March 30 in Jefferson County District Court against MGC Mortgage. The Joneses allege they financed property [...] in Beaumont through Citi Residential Mortgage. Out of the Jones' mortgage payments, Citi Residential should have paid homeowners and windstorm insurance premiums, according to the complaint.

• Later, in August 2008, MGC Mortgage purchased the Jones' mortgage and continued to accept their premium insurance payments, but failed to forward those payments to an insurance company, the suit states. Hurricane Ike struck in September 2008, causing property damage to the Jones' property, the complaint says. In October, they claim they notified their insurance company of the damages and requested the company cover the necessary repair costs. However, the insurance company refused to reimburse the couple, saying no insurance policy existed because MGC failed to secure a policy for the Jones, according to the complaint.

Source: Couple blames mortgage co. for failing to pay insurance premiums.