Force-placed Insurance and Me

New Orleans  I find no joy in reading about forced-placed insurance, but I take great satisfaction in seeing the farce and fraud of such anti-consumer insurance coming to light.  Quoting Benjamin Lawsky, superintendent of Financial Services from Gretchen Morgenson’s “Fair Game” column in the Times,

Force-placed insurance appears to be the dirty little secret of the mortgage industry.  It is a silent killer harming both consumer and investors while enriching the banks and their affiliates.

I was particularly drawn to the comments of Mark Rodgers who was flaking for CitiMortgage and claimed,

CitiMortgage does not sell homeowner’s insurance to consumers.  If a homeowner does not provide an insurance policy, CitiMortgage secures a policy to protect the interest of the investor.  Whenever the homeowner submits proof they have obtained insurance on their own, the lender-placed insurance is canceled.

Makes it all seem simple and straightforward doesn’t it?  Well, reality with CitiMortgage, not surprisingly is a whole different thing!

Unfortunately, I know because we owned a small, beaten up and dearly loved fishing camp in the marsh and bayou abutting the Big Branch National Wildlife Refuge just 35 minutes from our home in the 9th Ward of New Orleans.  We still own 2 acres of marsh with some protruding pilings there and hopes and dreams for the future some day, but for now it is a fond memory of life before Hurricane Katrina six years ago.  I think of the camp every month as I pay CitiMortgage for the memory and what is left of the place.  These days that is a simple process of them sending me a notice and me trying to get them a check, but thanks to force-placed insurance that was not always so.

Even after Katrina, I never missed a payment on the camp, but within months I started having problems with CitiMortgage that continued annually for quite a spell.  First they imposed homeowners insurance on the camp at great cost, even though any notion of a “home” had been flooded and flown to smithereens.  I would call and explain Katrina, and they would insist on more and more documentation for me to prove that there was no longer a structure on the property.  After months of payments and contention they would temporarily yield, issue a refund, and then it would start up again the next year.

And, then they would demand and force-place flood insurance.  No small amount of irony here, since flood insurance wasn’t available on the camp before the storm, much less after the storm.  Either way, there was nothing left to flood.

I almost wished that Citi had sold homeowner’s insurance, because at least I would have gotten kissed first.  They would have at least had to ask before they demanded, assessed and coerced the payments from me, rubbing raw the open sores of already deep discontent in the wake of the loss.

They have a scheme around insurance, but they have no system.

This “dirty little secret” needs to not only be exposed, but solved!

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