If you owe a mortgage on a home with inadequate or no insurance coverage, your lender may purchase insurance on your behalf. This is called forced-insurance and it protects the lender from monetary loss if damage occurs to the home.
When a lender takes out an insurance policy on the homeowner’s behalf, the bank receives a commission. It then becomes the responsibility of the homeowner to pay for the commission in addition to the insurance policy. Seeing the possibility of profit, banks began to form their own specialty insurance companies.
Many critics say that not only does forced insurance cost more than if the homeowner was to pay for their own insurance, but forced insurance provides less coverage than the average policy. Due to the controversy, many have begun filing lawsuits against lenders and insurers.
While this may be worth looking into if you pay a forced insurance premium, filing a lawsuit will not affect the foreclosure proceedings. Instead, you may want to consider other options such as filing bankruptcy. In either case, it is important to consult a professional legal counsel.
Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 866-200-4646.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.