Cenlar FSB Accused of Improper Force Placed Insurance Practices

As housing prices decline from the fallout of the recession, many homeowners are left struggling to make their payments, even missing payments altogether. These missed payments, among other reasons, may cause homeowners to lose their insurance.

Working together with insurance companies, some lenders allegedly took advantage of homeowners’ situations and began charging for force-placed insurance that the lenders put in place. The lenders reportedly received kickbacks or benefits from the insurance companies, prompting the filing of several force placed insurance class action lawsuits.

In force-placed insurance, the lender purchases insurance to protect their asset, usually at the expense of their homeowner customer.

Essentially, force-placed insurance policies that banks buy are usually more expensive than what homeowners would buy for themselves on the open market – sometimes 10 times as expensive, according to consumer advocates.

What is Force Placed Insurance?

Force-placed insurance, also known as lender placed insurance or collateral protection insurance, can occur for several different reasons. It may happen after a homeowner has accidentally allowed his or her original policy to lapse, or when a homeowner does not purchase coverage for a particular hazard that takes place in their area, such as flooding or tornadoes.

The purpose of lender-placed insurance, in theory, is to protect both the homeowner and the lien holder by guaranteeing the home remains insured.

However, in 2011, the New York State Department of Financial Services (DFS) launched an investigation into the practice and found force-placed insurance premiums are up to 10 times higher than those charged to people who have voluntary insurance. Despite the higher price tag, lender-placed insurance coverage can be substantially limited in many instances and often covers different risks.

Cenlar FSB Accused of Improper Force Placed Insurance

Some lenders, like Cenlar FSB, have been charged with taking out and force-placing unnecessary insurance policies in order to receive kickbacks from insurers.

In fact, one Florida homeowner filed a force-placed insurance class action lawsuit against Cenlar FSB after the company allegedly force-placed an insurance policy on his property.

Plaintiff Thomas M. claims that when he purchased a second home in 2008, using Cenlar as the lender, he purchased a homeowners insurance policy to cover the home. In 2012, Thomas was notified by Cenlar that, according to the terms of his mortgage agreement, he was required to buy wind insurance that his current homeowners policy did not include.

When Thomas refused to purchase wind coverage, citing that the bank had accepted his homeowners insurance policy for the past three years with no issue, Cenlar allegedly purchased a policy that included wind coverage on his behalf and billed Thomas’ escrow account over $7,500 for the annual premium.

Force Placed Insurance Class Action Investigation

Spurred by allegations from homeowners such as Thomas, attorneys have launched a force-placed insurance class action investigation. The investigation is looking into allegations associated with the practice of force-placed insurance at certain bank and mortgage lenders such as Cenlar FSB.

If your bank force-placed an insurance policy on your home, your bank may have treated you unfairly. Your lender may have deceived you when it force-placed insurance at an unreasonable or excessive rate, and you may be eligible to join a force-placed insurance class action lawsuit investigation and seek compensation for the improper charges you paid.

Join a Free Force-Placed Insurance Class Action Lawsuit Investigation

If you paid for force-placed insurance from a lender, you may be eligible to join a free class action lawsuit investigation into the improper charges you may have paid.

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