Loan Servicer Drives Homeowner Into Foreclosure After Clipping Her With Excessive Force-Placed Hazard Insurance

In Nassau County, Florida, The Florida Times Union reports:

• Myrtle Harrison has lived in her mobile home for more than 25 years. For the first 20 years, she owned the home outright, free from any mortgage. But in a series of developments that began six years ago, Harrison has become ensnared in circumstances - partly due to bad decisions, partly due to being taken advantage of - that make it likely she will lose that home and its 1.4 acres near the south bank of the Nassau River.

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• The tipping point for Harrison - that triggered a recent foreclosure notice - was force-placed insurance added on top of her mortgage payments. [...] So what is force-placed insurance?

• "This is a big scam," says April Charney, an attorney with Jacksonville Legal Aid, who counsels homeowners battling foreclosure.(1) A lucrative revenue stream for financial institutions, force-placed insurance often comes as a surprise to homeowners who are ill-prepared to pay its excessive premiums.

• How Harrison got to force-placed insurance, which bills her at $200 per month on a home and property valued at $57,000, is not uncommon, Charney said. [...] Harrison said she wonders why the insurance for a mobile home valued at about $19,000 is costing her $200 a month. The land is valued at $42,000, according to a Duval County Property Appraiser's website.

• Force-placed insurance sometimes actually covers more than just the value of the home, Charney said. Homeowner's insurance is supposed to insure only a home, not the land, although a mortgage finances both. That's because although a home can burn down or be destroyed in a storm, but land generally can't.

• But force-placed insurance often is imposed for the full value of the loan, not just the home, Charney said. That means the force-placed insurance is debt insurance, not just homeowner's insurance. "They have the right to force-place property insurance, but not debt insurance," Charney said.

For the story, see Insurance required by mortgage company leaves owner of Nassau mobile home facing foreclosure (Myrtle Harrison will likely lose her $19,000 mobile home to foreclosure. Among the reasons: She must pay $2,400 a year in "force-placed" insurance required by her mortgage company).

(1) Jacksonville Area Legal Aid is a law firm of 30 attorneys specializing in providing civil legal assistance to low-income persons in Duval, Nassau, St. John's and Clay Counties in Florida.