Thursday, March 10, 2011

Less "force-placed" insurance?

Jeff Horwitz, a sharp writer at American Banker, has been paying persistent attention to "force-placed insurance." It sounds like a kind of polite kneecapping. Reuters blogger Felix Salmon, who has been following Horwitz, explains,
"Essentially, if a homeowner fails to keep up their insurance premiums, then their loan servicer will step in and buy an insurance policy on their behalf, to ensure the home remains insured. It’s all perfectly sensible in theory. But in practice, it’s ripe for abuse, especially when the servicer owns the insurer."
Talk about offers you can't refuse.

Anyway, Horwitz reports in tomorrow's (Friday's) issue that this mortgage settlement proposed by the regulators and attorneys-general would take much of the profit out of the aforementioned forced placement. Hence, apparently, a likelihood of some very serious if quite privately expressed profiteers' hissy fits.

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