Paul Sullivan writes this week in his Wealth Matters column about force-placed insurance - insurance that a lender buys when it concludes that a homeowner does not have adequate hazard, flood or wind coverage. But the problem is that this insurance is almost always more expensive than the homeowner could buy in the open market. In addition, the coverage may be redundant or not needed at all. But homeowners have been reporting that they have a difficult time getting their lenders to remove the insurance.
The Consumer Financial Protection Bureau has proposed stricter rules on when and how lenders notify borrowers that this insurance is going to be bought for them. The agency has asked for comments on its proposed rules and plans to issue the final rules early next year.
But the lesson to be learned with force-placed insurance is a basic one in consumer finance: the burden is on borrowers to understand what they are being charged for and to complain if they think the charges are unfair.
Have you had to deal with force-placed insurance? Tell us about your experience. And can you offer advice to others?
