Federal Housing Finance Agency has not taken action on force-placed insurance
The Federal Housing Finance Agency has pledged to make changes to a controversial type of homeowners insurance coverage, but has yet to actually take any action on the matter. The agency’s director told the Senate Banking Committee this week that the agency was making progress in addressing the issue of force-placed insurance, but none of the agency’s plans have gone into effect yet. Force-placed insurance has become a controversial topic in the U.S., with many consumers and state officials calling for major changes to be made to this type of insurance coverage.
Force-placed insurance is a major financial burden for homeowners
Force-placed insurance is a type of coverage that banks use to protect the properties of homeowners that are behind on their loan payments. This type of homeowners insurance costs significantly more than conventional coverage and represents a major financial burden on consumers that are already struggling to manage their funds. Earlier this year, the Federal Housing Finance Agency prohibited organization from collecting payments in exchange for purchasing force-placed insurance and promised to take additional action later this year.
Some organizations have managed to circumvent bans instituted by federal agency
Many subprime mortgage servicers have found a way to sidestep the ban issued by the Federal Housing Finance Agency, allowing them to collect commissions on force-placed insurance coverage. The agency noted this week that addressing this particularly issue will be difficult, but promised to take aggressive action. The agency did not provide specifics regarding its plans to remedy this problem.
Force-placed insurance will likely continue to be a costly problem for some consumers
In some cases, force-placed insurance can be as much as 10 times more expensive than conventional homeowners insurance coverage. Consumers and advocacy groups have decried force-placed insurance for some time, but relatively little has been done by the federal government to rectify this issue. It could take the Federal Housing Finance Agency some time to find an effective solution to the problem. Meanwhile, some homeowners will have to continue juggling the financial burden of this type of coverage.