ALBANY — New York is expanding a national investigation and scheduled public hearings into so-called forced-placed insurance that add costs to homeowners seeking to avoid foreclosure.
Banks and mortgage holders take out force-placed insurance when a homeowner misses a mortgage payment or fails to maintain homeowners insurance required by the mortgage.
But state Financial Services Superintendent Benjamin Lawsky tells The Associated Press that the high cost of forced-placed insurance adds to struggling homeowners’ debt and makes escape from foreclosure even more difficult.
Lawsky also sees questionable profits and possible conflicts of interest.
He’s targeting several banks and mortgage service companies nationwide and is demanding justification for premiums.
Lawsky says that even though the insurance costs homeowners more, it often provides less protection for the consumer while protecting the lender’s interest.