Banks Preying on Homeowners Again
The crackdown by US regulators on banks charging exhorbitant ‘forced placed’ insurance fees is long overdue. US lenders have already been exposed for forging borrower signatures. ‘Forced placed’ insurance, which is typically more than double the cost of regular homeowner’s insurance has been a lucrative scam for banks in the wake of the housing crisis. In some cases, banks have charged more than 10 times the regular voluntary home insurance rates–and yes, banks often receive commissions for their unholy alliance with insurers.
Obviously banks once again have been preying on homeowners by colluding with insurers to artificially inflate these ‘forced placed’ insurance premiums. Homeowners often don’t even know they’ve been had until their bill doubles, triples or quadruples. I’ve personally seen this happen countless times to my clients.
This issue does not only affect homeowners–since Fannie Mae and Freddie Mac have to pick up the tab for much of these unpaid insurance fees, we will all ultimately pay the price for yet another banking scam.
For more information on this topic see this Wall Street Journal post.