NY State Reaches Force-Placed Insurance Settlement

Eric Anderson, senior associate, offers his take on the New York State force-placed insurance settlement. Sample excerpts: “Eric Anderson a senior associate at consulting firm Pace Harmon told Total Mortgage, ‘As the housing bubble burst and the economy worsened, the volume of force-placed insurance increased dramatically as more and more homeowners became delinquent on their mortgages, allowed their homeowners insurance policies to lapse, and were subjected to force-placed insurance policies. Since homeowners generally foot the bill for these force-placed policies, the high premium costs are a contributing factor to homeowners not being able to be current on their mortgages. If the homeowner cannot pay for the force-placed policy, the investor – usually Fannie Mae and Freddie Mac – pay the premium, an expense that is ultimately paid by taxpayers. Some of the reforms being discussed by regulators and consumer groups could lower these force-placed premiums by around 30%, a savings that could make a huge difference for many struggling homeowners. It would also save taxpayers hundreds of million per year.’”

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