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Hearings on ‘forced’ insurance in foreclosure
The Associated Press//May 17, 2012//
Listen to this articleALBANY — New York regulators say premiums for so-called “force-placed” insurance have more than tripled since 2004, producing enormous profits for insurers and the banks that take out policies when a homeowner fails to maintain coverage required by the mortgage.
Department of Financial Services Superintendent Benjamin Lawsky says in some cases the premiums are “exponentially higher” than regular homeowners insurance and can push homeowners into foreclosure.
Such premiums rose from $1.5 billion in 2004 to $5.5 billion in 2010 during the U.S. housing crisis.
Lawsky says that on a typical homeowner’s policy, at least 63 cents of every dollar pays claims. But with force-placed policies, he says often less than 25 cents and sometimes as little as 17 or 18 cents on the dollar pays claims, while the rest is mostly profit.
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