…is now worth $59,000. Her insurance company will only insure the house for $59,000. She owes $84,000 on the house. Her insurance company will not insure her home for more than it is worth. So her lender put a force placed insurance policy on her for $84,000 instead of the difference is her complaint, however her complaint should be about a lot more probably. This is so sad, and needs a solution. I ask how many advisors out of the 24 at the CFPB have experienced crime in almost every category, in relation to their mortgage, so they know what it would take, to not have experienced, all the crime? This board needs Transparency and Versability because we will tell them what they have wrong and right based on personal experience. How many victims of extensive abuse with analytical skills, that will speak up, do they have? How many whistle blowers from inside the bank are on this board to expose what the banks are doing that needs fixing? Please do not tell me “0″. I love Elizabeth Warren and the CFPB and I want this program to be hugely successful, because it is our only hope, for bank reform and is the only reason that I am sending you some of my suggestions that fall under the scope of your questions.

http://www.ask.com/answers/214056661/here-is-my-problem-i-have-policy-for-59-000-on-my-home-insurance-will-not-insure-for-any-more-than-that?qsrc=14106#jaques_frm « less

…the homeowners know they are about to be screwed over, with over priced insurance, that is going to make their problems much worse, and may prevent the chance of any recovery. Providing it in writing, mandated by the CFPB just means that the government approves of this behavior, which makes the pain even worse. This is deplorable! That is like saying, if you don’t send in your $100.00 electric bill payment on time, we are going to charge you $500.00 per month for electric instead and we are going to add a creepy middle man, to share in our electricity scam that “cost significantly more”. The government wants to increase transparency, so I have to give you heads up to the scam in writing. (Problem:homeowner has run into a financial issue and can’t make their property insurance payment. My 2nd provided Solution: Get the insurance payment as low as possible by eliminating all optional coverage and only insure the structure for the bank at the lowest price possible.) Allow the bank to place this on auto pay monthly and charge the homeowner interest on this amount just like their home loan. If home is 3.5% interest then 3.5% on the insurance balance paid out monthly on auto pay. If the combined balance at the bank between principle, interest and property insurance ever equals 3 months behind then foreclosure is an option. If the bank cannot continue the same policy then they have to find one at the same price or lower. Remember this policy has a lot less things it covers because the homeowner side is removed (content etc.) so it actuality is still considered “significantly more” at the same price because it covers less categories now and nobody has addressed this. If you kick people when they are down instead of helping them up or just not kicking them and see if they can get up on their own is a better option.
The absolute worst issues, with force placed insurance are not even being addressed at all, like: Switching servicers every few months to generate a new annual prepaid force placed insurance policy, over priced policies, over lapping policies, prepaid policies that generate prorated refunds for unused insurance where the servicer gets paid twice on the same policy, the servicer and the closing agent both collect for the same insurance policy at closing, new force placed insurance policies being generated 2 months AFTER the property sold and even back dating this policy to the closing date and not mailing me a copy of it until 3 years later (just got a copy of it a couple of months ago). Multiple policies at the same time that include successors and assigns as obligated parties to the policies. This is some of the things that happened to me and or my friend. As shocking as this was, it is even more shocking that the CFPB just wants banks to notify borrowers that they are about to be kicked them while they are down as a solution. Trust me all borrowers have friends that have already been kicked and they don’t need a warning because they know what’s coming and this is irrelevant to any solution. « less

…an expense. If the borrower has reneged on his responsibility to make his monthly mortgage payments and also allows his fire insurance to cancel, then I as the mortgagee should have the right to protect my interest in the collateral property in a reasonable manner, one which will not possibly cause me to lose more money.

Now, to answer your questions.

1. There are a lot of variables which determine the cost of the HO Ins policy. Credit history and property location are probably the two most important. $100,000 of forced placed insurance would cost, through my provider, $1,545.00. A HO Ins policy through a traditional carrier with dwelling coverage of $200,000.00 could cost, based upon my experiences, between $600 and $2,000. But I deal with smaller balance loans of 10K to 30K, where the cost of the forced placed policy is almost always less than the HO Ins premium.

So, there is no simple formula that we can use to say that when the mortgage is paid down by X percent, forced insurance will be less expensive than traditional coverage.

2. Although I would happily accept an exception for mortgagees who service their own loans (which I am), I think the rule should be based on a solid principal. As the rule stands now, someone — either the servicer or the note owner — is being required to pay out more money than it has to in order to protect its interest in the property. Just because the servicer is different from the note owner really should not make a difference. Someone is being forced to potentially lose more money than necessary.

In my opinion, if the borrower in default is properly notified that his HO Ins policy will no longer be escrowed, and if the borrower in default fails in his responsibility to keep the policy in force, then I believe the mortgagee or the servicer should be free to place a forced policy to protect its interest.

As we have discussed previously, if I pay the customer’s premium on his HO Ins policy, he can cancel the policy and receive the refund. Asking me to pay the HO Ins policy for a borrower in default in monthly installments seems to me to be a tremendous additional burden.

Additionally, why should I as the mortgagee be required to pay for the defaulted borrower’s liability coverage and personal property coverage? This may sound harsh, but when I make someone a loan, I don’t want to become his surrogate mother who has to pay his bills when he can’t or won’t.

3. The CFPB’s alternative proposal is certainly more appealing than the existing proposed rule. In my situation, the forced placed policy will most likely cost less than the HO Ins policy. So, I can accept it for sure, but I don’t think it is based on a sound principal.

As a drawback to the alternative rule, I do see some litigation issues. If I choose forced insurance over the defaulted borrower’s HO Ins policy, and there is a loss, some heavy litigation could result. But overall, I absolutely prefer the alternative proposal.
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…would cost the servicer less than continuing the homeowner’s policy. Would this address your concerns, and do you see any drawbacks to this approach?
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…has the option to continue paying on his insurance. If he keeps his policy in force, we will accept that. If he doesn’t, and the policy cancels, we will need to write forced insurance.

You seem to have a very strong point of view. Kindly explain to me your rational for why I have to risk more of my own money, paying a very expensive HO Ins policy, for a customer who is no longer paying me, when I can protect my interest in the property for 1/3 as much. « less

…that by the investor. Once again, your real world example holds no water.

3) in every case, it is always cheaper and better for everyone involved to have the preferred voluntary policy continued rather than placing a force-placed policy. You’re not being forced out of anything. « less