When you obtain a home mortgage, you are required to obtain hazard insurance on the property and if you let this insurance lapse, the mortgage servicer can get its own insurance coverage which is often much more expensive and the home owner must pay!
However, recent lawsuits allege and have revealed that “forced-place insurance” actually may come from scams in which the insurance companies pay the mortgage servicers kickbacks in exchange for the force placed coverage at inflated premium costs. This is the basis for a new class action lawsuit against Ocwen and Assurant a large insurance company, where it is alleged that the company was paid commissions and kickbacks in exchange for getting the insurance policies.
One Plaintiff in the law suit had been paying $700 in premiums annually for his original hazard insurance but it lapsed for non-payment. In 2011, his servicing was transferred to Owen and he received a note from the company saying that it had force placed a new policy of insurance, which was three times higher in price–$2,180! One year later, that was raised to $2,244.
Jeffrey Newman represents whistleblowers