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The insurance regulator in the nation's largest state says underwriters are paying an insufficient amount in claims, suggests commissions paid to banks are part of the problem.
March 14 -
Fannie Mae intends to acquire coverage for uninsured borrowers through a carrier of its choosing, it announced on Tuesday. The move would "significantly reduce costs to homeowners, taxpayers, and Fannie Mae," the GSE says, but harm a profitable business for mortgage servicers.
March 6 -
A federal judge has granted approval for a Florida force-placed insurance class action to proceed against Wells Fargo and QBE Insurance. Evidence already uncovered in the case poses added peril to the defendants and other banks.
February 22 -
A New York probe has brought national attention to banks' alleged self-dealing in the sale of force-placed insurance. But the investigation is just one of many looming challenges to the practice.
January 18 -
Evidence of abuses and self-dealing in force-placed insurance suggests there may be far larger problems in how servicers are handling home loans than sloppy document recording.
November 9 - PH
Before servicers force-place insurance, they often warn homeowners that the policy is costly, offers poor coverage and is likely to benefit the servicer. The investors who often end up paying for that same policy don't benefit from the same notice.
November 9
Fannie Mae has delivered a second blow to standard industry practices for force-placing homeowners insurance on borrowers whose policies have lapsed.
New
The move comes on the heels of the government mortgage giant's announcement that it intends to request proposals from major force-placed insurers to directly provide the product to Fannie Mae. That plan, together with the new guidelines, suggests that Fannie is no longer willing to bear some of the costs traditionally associated with force-placed insurance.
Among the notable restrictions in the latest guidelines is a prohibition on acquiring force-placed insurance from carriers whose rates are not subject to state regulation.
QBE did not immediately respond to a request for comment late on Thursday afternoon. Neither did Wells Fargo & Co, which is being sued over its partnership with QBE in a Florida class action.
The guidelines restrict what costs servicers can ask Fannie Mae to reimburse in the event of a borrower default.
"Fannie Mae is clarifying its requirement for reasonable reimbursable expenses for lender-placed insurance," the notice to servicers says, before listing charges that are not reimbursable: "any lender-placed insurance commission earned on that policy by the servicer or any related entity, costs associated with insurance tracking or administration, [or] any other costs beyond the actual cost of the lender-placed insurance policy premium."
Jeff Golant, an attorney who has filed force-placed consumer cases for several years and is among the attorneys handling the Florida QBE suit, welcomed the new rules.
Assuming Fannie enforces them, "this fundamentally changes the conditions in the market right now," he says. If banks must bear the cost of placing the policies and are unable to bill Fannie Mae for commissions paid to them, "it's going to change the whole industry," he said.
