May 27, 2024

Bucks: When Banks Impose Homeowner’s Insurance

Paul Sullivan writes this week in his Wealth Matters column about something called “force-placed insurance.” It is the insurance that a mortgage company buys when it believes the owners of a house no longer have insurance on the property.

But as Mr. Sullivan found out, mortgage companies are often imposing the insurance on homeowners already having trouble making their mortgage payments. Because the insurance is more expensive than homeowners’ insurance available on the open market, the additional costs have been sending some homeowners into foreclosure.

In other cases, particularly in areas prone to natural disasters, Mr. Sullivan reports, homeowners have been getting notification that they lack flood or hazard insurance even if they already have the coverage or don’t need it.

His main advice for anyone who has received these notices is to act quickly to prove to the mortgage company that the insurance is not needed.

Have you received one of these letters from your mortgage company? What was your experience? Mr. Sullivan reported that he got a letter in November from his lender and it took him four months to resolve the issue. Were you able to resolve your dispute more quickly? If so, how?

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