Big Banks Slammed With Miami Home Insurance Inquiry
Bank officials have managed to skirt prosecution from government officials, despite obvious robo-signing, falsifying documents and other unlawful practices that have thrust homeowners into foreclosure, short sales and strategic default.
Our Miami foreclosure defense lawyers hope that even though prosecutors traditionally haven’t put much pressure on bank officials, perhaps industry officials will use the court system to hold the banks’ feet to the fire for their transgressions.
If the government isn’t going to stand up to help homeowners who are struggling with Miami foreclosure, then who will? Our lawyers are fighting for Miami homeowners, but we do so on an individual case basis. Someone must step in and offer some real punishment for these tactics.
According to a recent story in The New York Times, a New York financial services agency is investigating banks to determine if they fraudulently steered homeowners into overpriced insurance policies. It’s already been reported that banks encouraged minority borrowers into subprime loans when they qualified for regular loans because the higher interest rates were more attractive to investors.
Now, it appears from the investigation, bank officials encouraged distressed homeowners who were falling behind on insurance payments to sign up for insurance policies that were up to 10 times as expensive as their original plans. In some cases, the banks offered policies that were in-house and controlled by the banks themselves, bringing up conflict of interest questions and suspicions of kickbacks as well.
Among those being investigated were JPMorgan Chase, Bank of America, Citigroup and Wells Fargo. The state office doing the investigation sent out 31 subpoenas and other legal notices in October as part of its investigation.
This brings up an important issue, however. Because many states are in negotiations with banks to come to a large-scale settlement for the banks’ misdeeds, would something like home insurance be covered? Since New York is one of a handful of states not participating in this get-out-of-jail-(relatively) free negotiation, it’s likely it could continue its investigation in the home insurance issue, despite the agreement with the other states and the banks.
It appears this is just another scheme devised by banks to keep a grip on their borrowers. The Times article suggests that when homeowners get behind on home insurance payments, the banks attempted to get homeowners to take out even more expensive policies. This has also hurt the real estate market, as homeowners have found it difficult to refinance their loans after banks tied this insurance coverage to their houses.
In general, mortgage servicers are allowed to take out insurance policies on homes when borrowers allow coverage to lapse. But homeowners end up picking up the cost in their mortgage payments, sometimes without knowing it. While some increase is expected because insuring people who have fallen behind on payments is risky, the investigators say some of the increases are exorbitant.
This is just another sneaky attempt for banks to make more money off borrowers. It is the reason many Miami homeowners are struggling with foreclosure and forced to make difficult financial decisions that affect their future. Let’s hope more of these investigations pop up so the truth about what banks have been doing for years comes out.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991.