Sunday, July 15, 2012

More Homeowner Casualties From The Frontlines Of Banksters' Force-Placed Insurance Racket

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

  • Florida led the country in its share of force-placed insurance premiums the past three years, including 35 percent, or $1.2 billion, in 2011 — more than three times the amount sold in the next-largest state, California.

    That's according to sworn testimony provided last month for the United States Judicial Panel on Multidistrict Litigation.

    Florida has one of the country's highest numbers of foreclosures, and most people stop paying insurance premiums when they default on mortgage payments. That means a lot of policies are imposed on consumers without coverage.
  • The policies should cost less because they typically exclude coverage offered by most homeowners and the insurers don't have to pay agent commissions and advertising or customer service costs to attract and keep policies, said David "Birny" Birnbaum, a former insurance regulator in Texas who is now an economist and consumer advocate with the Center for Economic Justice in Texas.

    Birnbaum provided the testimony on Florida and other states' shares of force-placed insurance policies, calculating the numbers using thousands of records from the National Association of Insurance Commissioners. "Some of these charges are so outrageous that they push people into default and foreclosure," Birnbaum said.

    Just how much are South Floridians paying?

    Lord Toussaint said he's being charged a whopping $90,000 a year for coverage that used to cost $5,600 for his home in Coral Gables. Toussaint, owner of an electronics business, said he has been trying to get the mortgage servicer to reduce the coverage since he was notified last year of the higher cost.

    The problem, he said, is the imposed policy covers the home for $3 million — what may be considered the new value of the home since he made major renovations — instead of the $560,000 amount of the loan.

    Christina Ulbrich, of Fort Lauderdale, was allegedly billed $12,787 and $9,708 for a year of force-placed hazard insurance and windstorm insurance, respectively, when she already had hazard coverage for the same period. Nationwide Insurance had charged her $892, and her mortgage doesn't require windstorm, according to a lawsuit she filed in November in U.S. District Court for the Southern District of Florida. The policies were backdated up to 17 months, and the windstorm policy had expired months before the mortgage company purchased it on her behalf, the suit alleges.

    Hilda Sultan, of Davie, was charged $33,199, including a $7,138 commission for an insurance agency that is a subsidiary of her mortgage servicer, according to 2009 court documents in a lawsuit pending against the mortgage company.

    She "always maintained appropriate insurance coverage," but the servicer imposed the policy anyway — costing her eight times more than the roughly $4,000 it should have cost, according to the suit. "I had no awareness whatsoever that anything lapsed. I thought it was coming out of my mortgage payment and the escrow [account]. They didn't notify me. I didn't know until I was refinancing my loan ... during my divorce," said Sultan, a full-time mother who said she spends her spare time working on child advocacy legislation. "I felt devastated, absolutely devastated. I was counting on that money for my children's education."

    Jeff Golant, an attorney representing borrowers in about 20 lawsuits over force-placed coverage, including Sultan's, said even when companies provide notice, it doesn't give them the right "to rip people off."

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