California Citibank Mortgage Force-Placed Insurance Investigation

Posted by on Jan 10, 2017 in Questions and Answers | 0 comments

A lawsuit investigation has been launched of Citibank Mortgage into what seems to be an industry-wide practice of banks and lenders overcharging California homeowners for “force-placed insurance”.

Force-placed insurance is flood, homeowners, or other type of insurance imposed by the mortgage company if a homeowner’s own insurance policy lapses. Force-placed insurance is not illegal, but several lenders allegedly overcharge for the insurance policies in exchange for kickbacks.

Mortgage holders are required to maintain home hazard insurance to protect the property in the event of a disaster. This insurance often includes flood insurance, earthquake insurance, and other types of disaster insurance.

Force-placed insurance, also known as lender-placed insurance, is a home or flood insurance policy placed by a lender or bank in the event that the hazard insurance policy is cancelled, has lapsed, or is deemed insufficient.

This has allegedly led to widespread abuses against consumers, including agreements that prevent banks from issuing policies with competitors. The insurer then takes a portion of the homeowners’ premium and gives it to the bank as a “kickback”.

This can result in homeowners paying far more for the force-placed insurance policy than if they had purchased a policy on the open market.

Furthermore, force-placed insurance has sometimes been billed to homeowners retroactively. In other words, homeowners were billed for property insurance during the period of time that their previous policy had lapsed, in addition to being billed for a new policy. There have been reports that homeowners have been billed for force-placed insurance even though they already have a home insurance policy.

If you need information on this or any other legal issue, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.

 

 

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