- Posted by Hostmaster
- On March 1, 2019
- 0 Comments
A recent case we’ve looked at raises questions regarding Nationstar, dba Mr. Cooper’s, practices regarding “FORCED – PLACED INSURANCE”. As the term implies, forced-placed insurance occurs when the homeowner, for whatever reason, lets the hazard insurance on the home lapse so that the mortgage servicer must place insurance of its’ choosing on the residence to protect its interest against loss. Historically, this is an area that was rife for fraud, as forced-placed insurance opens the door for the possibility for the servicer to gain additional fees from the much higher cost such insurance costs the homeowner.
In our case, it appears that the homeowner let her insurance lapse, causing Nationstar to force-place insurance. It is questionable whether Nationstar gave her notice before doing so, but it ended up charging her almost three times the cost of her regular premiums for a year for one month’s worth of forced- placed insurance.
The matter raises two immediate questions: 1) was the homeowner properly notified that the insurance was being placed before she was charged for the coverage; and 2) was the cost charged fair and reasonable? Federal law requires that a servicer give at least forty-five days written notice before it charges for the coverage. The obvious purpose of this requirement is to allow the homeowner to protect herself from incurring the higher cost of forced-placed coverage by securing coverage on her own.
Federal law also prohibits mortgage servicers from charging a homeowner any unreasonable or unjustified fee. This applies to the cost charged for forced-placed insurance. Therefore, the question becomes; “What the amount Nationstar charged for the forced-placed insurance reasonable?” The answers to these questions will prove to be interesting.