SATELLITE BEACH, Fla. — A Satellite Beach couple claim a mortgage company’s mistake cost them more than $10,000, after it failed to renew their insurance policy.
Kelly Sanford and her husband expected to pay higher insurance rates for their home on a canal near the beach. But nothing had prepared them for a $10,000 hidden premium.
“It’s better than a perfect storm. I think I’m much like the Titanic and I sank,” Sanford said.
The Sanfords bought their home two years ago. Like most homeowners with
a mortgage, their monthly payment included escrow charges for their insurance policy. The lender paid their annual renewals from escrow at least it was supposed to work that way.
“So, I first suspected something was wrong when I got a letter in the mail saying that my check had bounced for the mortgage,” Sanford explained.
That’s when she discovered her loan payment had increased by nearly $600 a month because her insurance policy had not been paid. Then her lender took out a forced-insurance policy that cost nearly $10,000.
“It’s very expensive,” Sanford said.
“And there’s nothing you did wrong to trigger forced insurance?” Todd Ulrich asked.
“Nothing. Nothing,” Sanford replied.
According to Sanford, the lender, loanDepot, blamed her insurance provider for billing the wrong loan number and all attempts to correct it had failed. So the lender took out forced insurance to protect itself, but the Sanfords had to pay for it.
Forced insurance is controversial, because it often provides minimal coverage at sky-high rates and it leaves homeowners feeling trapped.
Sanford said she had trouble getting regular coverage from other insurers, “Many of them wouldn’t even talk to me because I was on forced coverage.”
When she finally found a policy, it cost twice as much.
The Sanford’s claim loanDepot told them there’s nothing it can do.
“They have an obligation to pay that premium,” said insurance expert Tom Cotton about the mortgage company.
Cotton says a Florida state law that was enacted in 2004 gives consumers like the Sanfords a chance to recover their losses, and he says it specifies that the mortgage company should pay the penalties if they fail to pay the premiums.
After Action 9 contacted loanDepot, the lender said anytime an insurance company fails to provide renewal information, a customer is sent two letters before buying a
LoanDepot managers could not comment on this specific case, but they said they’re working with the Sanfords to resolve the issues.
“I want them to take responsibility for what they’ve done,” Sanford said.
The mortgage insurance premium law is enforced by the Florida Department of Financial Services, and that’s the agency to contact if this happens to you.
“At loanDepot, everything we do is focused on creating the industry’s best customer experience. We comply with all applicable state and federal consumer protection laws and endeavor to take customer service a step further. In the case of lender placed insurance, where we are not able to obtain proof of property insurance or insurance renewal information for escrowed accounts from the borrower or their selected insurer, not only is it standard industry practice, but it is a servicer requirement that we obtain lender placed insurance on behalf of the customer to ensure that the customer and their home are protected. When or if the customer subsequently provides proof of insurance or policy renewal information on escrowed accounts, we then subsequently reimburse the customer for any added costs created by lender laced insurance for any dates in which duplicate coverage existed.”
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