Newest Bank Problem: Force-Placed Insurance on Miami Foreclosures
Banks are now coming under fire not only for their mishandling of many Miami foreclosure cases, which has led to people considering strategic default on their underwater mortgages, but now officials are being questioned about whether they forced people into buying insurance through companies with which they have ties.
As we wrote on our Miami Foreclosure Lawyer Blog recently, this issue isn’t going away any time soon. Our Miami foreclosure lawyers believe this is just another example of banks using their power to exploit the powerless as they hold hostage the one asset that really means most to people — their homes.
A recent article in American Banker reports that a recent New York Times article on the issue brought national attention to the issue of force-placed insurance. Now, a group of state attorneys general are adding force-placed insurance to its mortgage servicing settlement that has been in the works for months.
This is the large-scale settlement that most attorneys general throughout the country are working on settling so they can make money off the banks without fully investigating all their wrongful acts. Florida, unfortunately, is one of the states that is going along with this settlement, which would ban states from bringing certain legal actions against banks for their crimes in the future. There are a handful of states, including New York, that have vowed not to settle, but would rather investigate, let the truth come out and hold these banks accountable.
Force-placed insurance is when banks buy insurance on behalf of uninsured borrowers and then add the cost to their mortgage debts. In many cases, homeowners don’t realize a portion of their monthly mortgage payments are going toward that insurance and not toward their mortgage debt.
Allegations of wrongdoing were nearly nonexistent even as recently as two years ago, but now there are allegations that kickbacks were involved. In some cases, The New York Times article pointed out, banks owned or were connected to the insurance companies they were paying to write up policies for distressed homeowners.
The American Banker article reports that government authorities may be the people’s best chance at this point of exposing the issue of force-placed insurance, given their abilities to request documents and bring criminal or civil actions.
The article also suggests that the Consumer Financial Protection Bureau could enter the fray and look at the issue. Last year, HUD transferred its authority to enforce the Real Estate Settlement and Procedures Act to that bureau.
Of course, that doesn’t mean that Miami foreclosure defense lawyers are waiting on the government to act. There have already been civil lawsuits filed on behalf of homeowners by lawyers in Minnesota as well as Florida. Some mortgage servicers have already succumbed to pressure and altered their practices, the article states.
This is certainly an issue to keep an eye on because it is another example of ways the largest banks in this country have attempted to game the system and profit off the American people.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991.