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View Full Version : Help Mortgage Co. and Insurance-Is This Legal?



joyce
02-12-2011, 02:09 AM
I'm not sure if anyone can answer my question or not and I don't know where to go to ask. I live in Florida and when my windstorm insurance was canceled several years back I did not replace it for a couple of years. I was refinanced 6 years ago without it. Nobody was insuring here. I put a new policy into effect in January.

I get my escrow statement from my mortgage company and am scratching my head why I'm almost $6000 short. I call and they tell me on January 25, 2011 they suddenly enforced yearly windstorm policies on me backdating them to 2008. They are forcing me to pay for insurance policies that were not put into effect until this January. I'm forced to pay for insurance backdating to 2008. It was never even effective until this year. Hell, in 35 years living in this house I've never filed a claim for anything.

Is this legal? I can't understand why they would suddenly enforce insurance upon me years after the fact. I'm with IndyMac and the whole thing seems so shady to me. I spent over two hours on the phone with them and nothing. I don't know how it's legal to suddenly say, "Oh yeah, by the way we suddenly decided we want to charge you this year for insurance backdating to 2008."

I know it's a bank and I'm probably screwed, but it just doesn't seem legal.
Thanks in advance for any help or insight anyone can give me.

janwyl
02-12-2011, 02:37 AM
I'm no expert but no-one can make you pay for something you didn't agree to pay for.

The timing makes me wonder. You renewed your policy in January and the windstorm policy kicked in retroactively in January too, right?

Maybe there was something in the proverbial small print in the new policy? Either way, I suggest getting back on the phone to them (sorry) and asking them to direct you to the wording in the contract / policy that refers to the windstorm part of the policy. That's the only thing that matters - the wording in the contract / policy. Get that and you can go from there.

tjwriter
02-12-2011, 03:05 AM
OFG is a one of the local insurance gurus, but it seems odd to me that they could force you to pay for coverage you did not have IN THE PAST.

Cliff Face
02-12-2011, 03:15 AM
I don't see why anyone would even pay for insurance from previous years.

Think about it. Insurance covers you when bad things happen. 2 years ago, you had no insurance, and no bad things happened. Now, they want you to buy insurance for that year, which is already over and thus you could never claim any coverage from it.

I call bullshit on the bank.

Get the contract and read the whole thing all the way through. If you didn't sign something locking you into this torment, then perhaps it's time to call Consumer Affairs (or something similar in the US if you don't have CA over there). Consumer Affairs handles everything where money changes hands for a service, so yes, they can deal with a bank for you.

And CA can also get you some public backing by selling your predicament-story to a local Current Affairs program. It happens all the time over here, and even though those Current Affairs programs are generally unconvincing and just about badgering the defendant, they often work out in the end. (Unless, apparently, you're dealing with a single builder who has moved interstate after taking all your money and delivering a faulty house. Those guys never cave...)

Good luck. :)

Ol' Fashioned Girl
02-12-2011, 03:15 AM
It's called 'force place' insurance... and, at least here in the state of Okiehomie, it is put in place for any period of time you failed to keep it covered with a policy of your own. IANAL, and I don't even play one on the 'net, but I'd bet there's some tiny print in your financing documentation (you know... that inch+ thick stack of papers they shoved at you on both this and the former mortgage) that says (in some form) 'I(we) agree to keep an active insurance policy on this dwelling and if I do not, I (we) agree to pay for one that will be chosen for me by the mortgagee.'

It sucks, too... 'cause that 'force place' insurance rarely covers anything but the lienholder and only for the amount of the mortgage balance. And it's WAY more expensive and painful than any insurance you'd purchase for yourself - it's meant to be on purpose because the mortgage company doesn't want to be involved in your insurance.

And worst of all... yes - at least here - it can be collected for back-dated policies. I am not licensed in Florida, so what their laws are, I do not know.

Wish I had better news. :(

Cliff Face
02-12-2011, 03:21 AM
It's called 'force place' insurance... and, at least here in the state of Okiehomie, it is put in place for any period of time you failed to keep it covered with a policy of your own. IANAL, and I don't even play one on the 'net, but I'd bet there's some tiny print in your financing documentation (you know... that inch+ thick stack of papers they shoved at you on both this and the former mortgage) that says (in some form) 'I(we) agree to keep an active insurance policy on this dwelling and if I do not, I (we) agree to pay for one that will be chosen for me by the mortgagee.'

It sucks, too... 'cause that 'force place' insurance rarely covers anything but the lienholder and only for the amount of the mortgage balance. And it's WAY more expensive and painful than any insurance you'd purchase for yourself - it's meant to be on purpose because the mortgage company doesn't want to be involved in your insurance.

And worst of all... yes - at least here - it can be collected for back-dated policies. I am not licensed in Florida, so what their laws are, I do not know.

Wish I had better news. :(

That is the most astonishing thing I have heard in a long time.

It seems such a dishonest thing to do... I mean, like I said earlier - if you didn't have any insurance 2 years ago and didn't have anything happen that needed a claim, why would you then part with money after the fact when you know it's not going to cover you for anything?

And I just bet there's some sort of fine print that also says any insurance you're forced to pay for after the fact, won't cover you for things that happened during that period.

It just sounds so dishonest...

*shakes head*

joyce
02-12-2011, 03:24 AM
When they refinanced the house we did not have windstorm insurance and they never said one thing. I did have a small hurricane policy that paid my monthly mortgage payment in the event a hurricane damaged my house and was unlivable. So, they would have got their monthly payments regardless.

You mean, OFG, that even if I did not have windstorm insurance in effect when they refinanced, they can backdate policies to three years ago and force me to pay for them three years later. Even if I did not have a claim? It seems so illegal to me.

My current windstorm is not attached to my escrow account, as I'm paying for it myself. None of this happened until I put this policy into effect.

Ol' Fashioned Girl
02-12-2011, 03:57 AM
They actually probably had it in force, paid by them, during all the time you didn't think you had any. They're just getting around to updating your escrow would be my guess.

joyce
02-12-2011, 04:12 AM
They actually probably had it in force, paid by them, during all the time you didn't think you had any. They're just getting around to updating your escrow would be my guess.

No they didn't. I just spoke to an insurance lady at IndyMac today and she said they put it all in force on January 25, 2011. The force place was backdated to 2008 as of this year. If that was the case, that's sure some crappy bookkeeping. Besides, I owe so little on my house, if it were to blow down and leave behind a barren lot, they'd still triple the money I owe them. I'm one of those people they'd love to go under. I owe so little and they could make so much, even in this crappy economy.

From what I'm finding on the internet, this seems like a scam by mortgage companies, especially the backdating of policies by years. It seems it's making a bunch of people have to foreclose on their homes because of it. It looks like in Florida people are suing and winning cases because of it.

It still seems weird...I get a policy and suddenly I'm slammed for three years of policies I never received. If they'd put a hurricane policy into effect, I should have received a copy of the insurance documents.

I'm afraid to even mention I signed the refinance form without them requiring the insurance. They might backdate the force by double the years.

suki
02-12-2011, 04:20 AM
Not sure if this is legal or not - you need either a lawyer or a state regulator's advice - call your state's bank licensing/regulating people would be my advice.

But, in general... if a contract requires you to have insurance, sometimes when it's discovered you didn't have insurance (and so were in violation of the contract, technically), insurance is obtained covering that period you failed to do so - even if it's later and the policy is backdated. And that is done in case you, or someone else with an interest, belatedly makes a claim for damages that occurred in the period you failed to maintain coverage.

But, in determining whether it's legal or not, you need a professional's advice - a lawyer licensed in your state, and familiar with your state's laws and regulations, or a regulator for your state.

~suki

joyce
02-12-2011, 04:52 AM
Thanks everyone for all the help. I guess I'm just scr#@%^ no matter what. It does not seem right, but what can I do about it. I'd like to see them pay a claim for something that happened in 2008. It still seems like a scam ripoff to me. I could maybe stomach going back one year....but charging me for nothing happening 3 years ago seems crazy.

Silver King
02-12-2011, 05:18 AM
Joyce, you can contact the Office of Insurance Regulation in Florida to voice your concerns and have them look into the matter. The main page is here (http://www.floir.com/), and you can request assistance directly starting on this (https://apps.fldfs.com/eservice/NewRequest.aspx) page.

Good luck, and please let us know how you make out.

Mr Flibble
02-12-2011, 05:50 AM
Please excuse me while I *boggle*

You can charge insurance for a year that's already happened? No irsk, just lovely cash? I'm in the wrong business...

Excuse me, while I boggle again. *boggle*

Uncarved
02-12-2011, 06:39 AM
Also.... Call whatever news station that is local that has an investigative journalism team. Here it is called "On your side" or something. Alert them to what you've told us. They'll make it ugly for them with the publicity and you'll probably come out in better shape than without the publicity.
Just my 2cents.

Haggis
02-12-2011, 06:56 AM
Joyce, you can contact the Office of Insurance Regulation in Florida to voice your concerns and have them look into the matter. The main page is here (http://www.floir.com/), and you can request assistance directly starting on this (https://apps.fldfs.com/eservice/NewRequest.aspx) page.

Good luck, and please let us know how you make out.
Please do this, Joyce, and let us know how it works out.

joyce
02-12-2011, 07:55 AM
I'm going to call them bright and early Monday morning. I just need to hear legally that I have to pay this and they have a right to do it. Then I'll eat my bitter pill for a year.

I think about the small windstorm/hurricane policy I have had/have on my house for 6 years or more. It didn't pay for house repairs, but would make my mortgage payment for me if my house was hurt. I think it paid the mortgage payment for something like 2 or 3 years if that happened.

The mortgage company would have still been paid regardless if my house blew into the Atlantic or not. I figured that's all they worry about....getting that monthly payment. I do have regular homeowners insurance too.

From what I'm reading, many mortgage companies own the Insurance company that issue these "forced policies". The backdated money is just easy money the bankers can put into their pockets without a true policy ever being enforced.

I had no idea until this happened to me, that now many of the foreclosures are due to backdated forced policies. People couldn't afford insurance and when the mortgage found out it socked it to them for past years. It raised their escrow balance so much they could no longer pay. That's just pure sad.

Thanks again everyone for letting me whine. I think it's tequila time.

backslashbaby
02-12-2011, 10:10 AM
Don't assume you're wrong. Go to a professional and check it out. It's not like it'd be the first time banks didn't require something and then tried to act as if they did. There's been a lot in the press about predatory lending practices with mortgages. So somebody's been getting screwed who should have gotten a free consult with a lawyer or something.

Check it out for sure. If it is a scam, it's folks not pursuing it that makes it successful, not that it's legal.

ETA: check with your real estate lawyer, too, of course. S/he will have records of what was required and what wasn't and why that made sense to her at the time.