Many homeowners are paying excessive insurance premiums and do not even realize it.
Homeowners carry insurance to provide financial protection in the event their home suffers damage from a fire, hurricane or other casualty. Banks or other corporations holding your mortgage also want financial protection to secure the value of their collateral. That makes sense. If a fire destroys your house, and you don’t have insurance, then your home and the bank’s investment literally go up in smoke.
What does the bank and other corporations do to protect their investment? They buy insurance and require the homeowner to pay for it. They call it “lender insurance”. Consumer advocates like me call it “force-placed” insurance. Here’s the rub.
Many banks charge homeowners “forced-placed” insurance premiums that that are often 600% higher than the fair market cost. That’s not all. The banks often buy the insurance from a company that they own themselves. Sounds shady?
The banks and other corporations, in these situations, don’t shop around to get the best price. If you have received a letter or an email from your bank, mortgage company or other corporation holding your mortgage, that they have placed insurance on your home, then you need to check into it.
If you believe you’ve been a victim of excessive and unsavory lender insurance practices, feel free to post a comment about it, or email me.
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My husband and I are in the process of trying to purchase our first home. This is all new to me so I have been doing a lot of research regarding every aspect of the process as well as homeowners insurance. I’m just glad I have a heads up regarding this so called “lender insurance” these banks are forcing on homeowners.
Kelly,
Thanks for your kind words. Good luck with your home purchase!
I have a house I purchased in Saint Cloud Fl. BOA sold my loan to Greentree LLC, my “forced lender insurance” with BOA was $1700. yr now with Greentree it has doubled to a whopping $3400 plus dollars, I explained to them to send me a detailed invoice to see what cost so much and they cannot, and they refuse to give me the contact info to the insurance so that I can contact them myself. This new cost has raised my monthly payment another $400 a month. Talk about sticking it to the little guy.
Rene,
It sounds like you might have been over-charged, and may have a case against Bank of America.
Matthew Weiss
212-683-7373