Bloomberg’s editorial board had a pretty good denunciation of forced-place insurance, the scam whereby servicers purchase insurance for borrowers who they deem have lapsed coverage, at enormous markups with kickbacks for themselves, which in many cases drives homeowners into foreclosure. But this doesn’t capture the larger picture of the banking/mortgage lending and foreclosure industries getting off scot free despite onging crimes.
|By: David Dayen Monday May 7, 2012 1:10 pm|
|By: David Dayen Wednesday January 11, 2012 1:30 pm|
NYT reporter Louise Story reports on a new investigation in New York of big banks and their mortgage practices. This one is not being run by Attorney General Eric Schneiderman, though he reserves the right to get involved. Instead, the New York Department of Financial Services is investigating the banks on the issue of forced-place mortgage insurance, one of the biggest bank scams going.
|By: David Dayen Monday March 14, 2011 7:59 am|
Forced-place insurance is this: when a homeowner doesn’t pay for homeowner’s insurance for their mortgage, the loan servicer must step in to buy an insurance policy for the homeowner. This policy is supposed to be of comparable worth, but in this scheme, the servicer will purchase insurance for the homeowner that costs ten times as much or more, get a kickback from the insurance company for buying such an expensive policy, and then charge the investors or even the homeowner for the insurance. And the servicer usually reinsures the insurance, which means this expensive policy will never face a claim.
|By: David Dayen Wednesday November 10, 2010 4:55 pm|
To hear the big banks tell it, the crisis in foreclosure fraud has abated. They’ve checked and double-checked their documents, replaced the forms where necessary, and are now ready to move forward with the conveyor belt to evictions. If that’s the case, why is another top mortgage servicer suspending foreclosures?