The second sentence is wrong. Banks never lost a dime but profited from foreclosing. The banks collect insurance from delinquent loans, jack up insurance, kickbacks on forced-placed insurance, tack on attorney fees, make money via tax liens, pretend to help you with a short sale, pretend to tell you your modification is in process, then double dip by selling the property after they already raked up fees. By the end, they made a fortune off of “scamming servicing” the loan. I’m sure I’ve missed a thing or 5…
Does this sound like they lost any money? Only the taxpayers via the fraudulent twins…
BLOOMBERG-
One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.
Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.
The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.
Just like everything fraud involving the Banks, Fannie and Freddie…wait until they get their hands on the rentals!
WSJ-
New York’s top financial regulator is expanding an investigation of insurers that force homeowners policies on borrowers after turning up evidence that consumers were charged too much, according to people familiar with the situation.
Benjamin M. Lawsky, superintendent of the New York Department of Financial Services, is issuing new subpoenas and formal document requests to several insurers, demanding justification for how their rates and loss ratios were calculated, these people said.
The loss ratio is the percentage of premiums collected by an insurer that is paid out to policyholders. Based on information gathered in initial inquiries since the probe was launched in October, Mr. Lawsky…
Home buyers take out homeowners’ insurance policies to protect the value of their home and personal property in the event of a burglary or a natural disaster. The insurance is typically required to get a home loan, and if borrowers fall into default, banks have the right to make sure the property still has such coverage.
However, officials at the state and federal level have been concerned that insurers have been charging too much for something known as “force-placed insurance,” which takes the place of a lapsed policy.
This week, a new U.S. consumer watchdog and mortgage giant Fannie Mae have been promising a crackdown on those homeowners insurance policies.
In a speech Tuesday, the director of the new federal Consumer Financial Protection Bureau, Richard Cordray, said his agency will issue rules “to prevent (mortgage) servicers from charging for this product unless there is a reasonable basis to believe that borrowers have failed to maintain their own insurance.”
ONE of the richest and most secretive sources of profit in the mortgage business is coming under scrutiny.
It’s about time.
Gretchen Morgenson-
Investigators are training their sights on a type of hazard insurance policy known as force-placed insurance, a type of policy that has driven up costs for homeowners and pushed some into foreclosure. People who buy certain mortgage securities may be getting hurt, too.
FORCE-PLACED insurance. Most homeowners never hear about it until their mortgage lender sends them a letter saying that they must have flood or some other kind of insurance and that if they don’t act quickly, the lender will buy it for them — at a price, it turns out, that is almost always much higher than the market rate.
I was one of those homeowners, and I wrote a column last year about how difficult it was to get this type of insurance removed. I was reminded of that column when I read a colleague’s article about New York State investigating banks for making homeowners buy this overpriced insurance.
Keep digging down the rat hole and you’ll eventually get to the bottom of the Pyramid aka Ponzi!
American Banker-
New York’s Department of Financial Services has been probing banks and insurance companies for allegedly obtaining excessive profits on homeowners’ policies that they force borrowers to pay for when their insurance lapses, said people familiar with the matter.
Superintendent Benjamin M. Lawsky in the fall of 2011 dispatched formal letters to insurers and subpoenas to insurance agents and insurance brokerages run by several large banks to gather information on their practices, the people said.
This is not a glamorous approach to law enforcement, It is a slow laborious grind. As I presented to the National Association of Attorneys General, there are 10 major areas of bank and mortgage fraud:
1. MERS
2. Mortgage Pools (Warranties & Reps)
3. Bad Securitization (Quality)
4. “Misplaced” Mortgage Notes
5. Force-Placed Insurance
6. Illegal “Pyramid” Servicing Fees
7. Document Fraud for Sale
8. False Affidavits, Perjury (Robo-Signing)
9. Foreclosure Mills, Process servers exasperate problem
10. Active Servicemen losing homes while on tour of duty
Of this list, five issues are prosecution-ready, where individual states have jurisdiction. These include: 1) Force-Placed Insurance; 2) Illegal “Pyramid” Servicing Fees; 3) Fraud Documents for Sale; 4) False Affidavits, Perjury (Robo-Signing) and 5) Foreclosure Mills, Process servers.
Keller Rohrback’s investigation focuses on alleged abuses by Bank of America and JPMorgan Chase, among others, such as: failing to pay for hazard insurance out of the borrower’s escrow funds, charging homeowners for unnecessary insurance, backdating policies providing coverage retroactively, utilizing their own subsidiaries to provide the hazard insurance, and purchasing policies from companies who share fees or profits with the servicers—often without disclosing this information to the borrower. Keller Rohrback is also investigating the force-placed insurance practices of the following mortgage loan servicers:
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