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Homeowners

Bank of America Settles Forced-Place Insurance Claims for $228M

I’m glad to see this issue has finally been given the attention it deserves, as many home buyers were subjected to illegal “forced placed” coverage when mortgage companies constantly “sold” mortgages (with tax/insurance escrow accounts) to each other. It seems like everything but the insurance information would be provided to the new lender so they would automatically issued the forced placed coverage. When a home buyer would call the mortgage company he would always be told their monthly increases was because of the insurance costs. And he would never be told it was forced placed coverage. In the state of Main, these costs, for instance, often were in the range of $2,700 to $3,500 per year causing monthly increases of $200-400.

On November 10, 2010, American Banker published an article describing major mortgage lenders’ and servicers’ questionable and often illegal practices related to force-placed
insurance. The article revealed for the first time the exceptionally profitable exclusive relationships, collusive activities, and circular arrangements among the mortgage lenders and
servicers, their affiliates, and their cooperating insurers, most of which are Defendants here.
Lenders and servicers force place insurance when a borrower fails to obtain or maintain proper hazard or flood insurance coverage on property that secures a loan. Under the
typical mortgage agreement, if the insurance policy lapses or provides insufficient coverage, the lender has the right to “force place” a new policy on the property and then charge the premiums
to the borrower.
The arrangements revealed by American Banker comprise an extremely lucrative profit-making scheme in the hundreds of millions of dollars. There are just two insurance companies that control the entire market for forced-placed policies in the country — Assurant and QBE.
Assurant works through its subsidiaries Voyager Indemnity Insurance Company and American Security Insurance Company. These companies and their affiliates enter into exclusive relationships with the major mortgage lenders and servicers to provide the policies. The top four servicers that work with Assurant are Wells Fargo Bank, Citi, HSBC, and Chase. The top servicer that works with QBE/Balboa is Bank of America.
To maintain their exclusive relationships with these lenders, the insurers pay unearned “kickbacks” of a percentage of the force-placed premiums ultimately charged to the borrower, offer them subsidized administrative services, and/or enter into lucrative captive reinsurance deals with them.

Although force-placed insurance is designed to protect the lender’s interest in the property that secures the loan and thus should not exceed that interest, lenders often purchase
coverage from their exclusive insurers in excess of that required to cover their own risk. And, as a matter of practice, the major lenders and servicers collude with the two major force-placed
insurers to manipulate the force-placed insurance market and artificially inflate the premiums charged consumers, resulting in premiums up to ten times greater than those available to the
consumer in the open market. American Banker reported that “Though part of the extra expense can be explained by the higher risks associated with insuring the homes of delinquent borrowers,
force-placed policies generate profit margins unheard of elsewhere in the insurance industry even after accounting for the generous commissions and other payments that servicers demand.”

But finally Bank of America Corp. agreed to pay $228 million to settle claims the bank overcharged for insurance homeowners were forced to accept when their regular policies lapsed. The amount was disclosed in a document requesting approval for the accord filed yesterday in Miami federal court. Lawyers for homeowners told a federal judge in February that the Charlotte, North Carolina-based bank had agreed to a deal without providing further information.

The deal is an “extraordinary settlement” that provides “prospective relief that would effectively end the lender- placed insurance practices at issue in this case,” lawyers for plaintiffs said in the Bank of America case.
Read More »Bank of America Settles Forced-Place Insurance Claims for $228M

Insurance for Snowplow Damage

Our West Coast readers can skip this post. All other homeowners in the U.S. are aware that with a snow comes snowplow damage.
Mailboxes often are the first objects damaged because of snowplows, and the city ordinance may note that city shouldn’t be responsible for digging them out if they are covered with snow. Many properties sustain damage after a municipal snowplow driver tear apart the entire length of road at the front of residence, damage parked vehicles, lawns. Residents whose property lie beside public roads are reminded not to place any type of private property, including landscaping shrubbery, fences, light posts or mailboxes, in the right of way.
Here is a short video of snowplow literally cleans Brooklyn’s street.

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Cooking is the cause of two out of every five home kitchen fires*

Houseware-Gas-fire-cookingCooking has long been and continues to be the most common cause of home structure fires and home fire-related injuries. Whether preparing for a family dinner or a quick snack, practicing safe cooking behaviors can help keep you and your family safe.

  • Never leave your range or cooktop unattended while cooking. Even if you have to leave the room for a short time, turn your range or cooktop off.
  • When cooking, it is important to wear short, close-fitting or tightly rolled sleeves. Loose clothing can hang down onto hot surfaces and can catch fire if it comes in contact with a gas flame or electric burner.Read More »Cooking is the cause of two out of every five home kitchen fires*

NC: Agreement Reached on Homeowners Insurance Rates

On March 5, Insurance Commissioner Wayne Goodwin signed a settlement agreement with homeowners insurance companies allowing an overall statewide average rate increase of 7 percent, varying by territory and form, beginning July 1. The insurance companies, represented by the North Carolina Rate Bureau, had requested an overall statewide average rate increase of 17.7 percent on Oct. 1, 2012. The difference… Read More »NC: Agreement Reached on Homeowners Insurance Rates

Reduce the Chances of Dog Biting

With dog bite claims accounting for over one-third of all homeowners insurance liability claim dollars in 2011, we remind dog owners to take preventative measures to protect themselves from the potentially serious financial consequences of aggressive canine behavior. • Consult with a professional (e.g., veterinarian, animal behaviorist, or responsible breeder) to learn about suitable breeds of dogs for the insured’s… Read More »Reduce the Chances of Dog Biting

Common Cause of Fire – Laundry

An estimated 2,900 clothes dryer fires in residential buildings are reported to U.S. fire departments each year and cause an estimated $35 million in property losses, according to a new government report. The report by the U.S. Fire Administration said that 84% of clothes dryer fires took place in residential buildings. Also, according to the report:   Clothes dryer fire… Read More »Common Cause of Fire – Laundry

Earthquake Deductible Buyback in California

A few facts about earthquake insurance: Fact I:  Most residential insurance policies do not cover earthquake damage – a separate earthquake policy is required. Without earthquake insurance to help you cover the costs of repairs and other expenses that come with catastrophic damage, you will pay out-of-pocket to fix your home, to replace your personal property, and to live and… Read More »Earthquake Deductible Buyback in California

Home Foreclosure Prevention Program in R.I.

Only about one-third of the more than $79 million available from a federal foreclosure prevention program in Rhode Island has been spent to help struggling homeowners. Some states have spent a far lower percentage of their Hardest Hit Fund allocations than Rhode Island. Andrea Risotto, a Treasury Department spokeswoman, said that as of the end of May, states had drawn… Read More »Home Foreclosure Prevention Program in R.I.

Top 10 States for State Farm Dog Bite Claims in 2011

State Number of claims Claims paid (estimated) 1. California 527 $20.3 million 2. Illinois 309 $10.0 million 3. Texas 219 $5.1 million 4. Ohio 215 $5.4 million 5. Pennsylvania 197 $4.9 million 6. Michigan 181 $7.0 million 7. Florida 157 $5.1 million 8. Indiana 139 $3.5 million 9. New York 133 $6.1 million 10. Minnesota 117 $3.5 million Want to… Read More »Top 10 States for State Farm Dog Bite Claims in 2011