A pair of the nation's largest mortgage servicing outfits are being eyed by a Seattle-based law firm for their practices regarding the use of forced-placed insurance.
The firm, Keller Rohrback LLP, said it is looking at Bank of America and JPMorgan Chase, among others, as it investigates this issue and how it affects consumers.
JPMorgan Chase declined to comment; B of A did not return a request for comment.
Gretchen Obrist, an attorney with Keller Rohrback, said the firm is handling a number of cases regarding servicers and mortgage modifications and it has received phone calls from many people relating to various issues regarding their mortgage servicers.
Among the calls it received are from borrowers who are having problems regarding forced-placed insurance and the fees and other charges attached.
Keller Rohrback has yet to file a lawsuit; it handles cases on a nationwide basis.
But one of the problems associated with the use of forced-placed insurance, Obrist said, is that it is not always clear to the borrower that it has been added to their loan until well into the process.
Erin Riley, another attorney with Keller Rohrback, said the borrower is also not familiar with the term forced-placed insurance or what it means.
Servicers are supposed to give notice to the borrower of when forced-placed insurance is being put on their loan and that might not always appear to be the case, Obrist said. On the borrower's servicing statement, it could appear as hazard insurance, flood insurance or homeowners insurance.
Forced-placed insurance could come about in a number of ways, she said. This includes the borrower not making tax and insurance payments through an escrow account and for some reason, they let their policy lapse or fall behind on payments. If there is an escrow, the servicer may have stopped making the premium payments.
These lender-acquired policies can be many times more expensive than any policy the consumer could find on his or her own.
While B of A and JPMorgan Chase seem to be the primary focus, other firms Keller Rohrback said it was looking at include Aurora Loans Services, Downey Savings & Loan, EMC Mortgage Corp., Financial Freedom, GMAC Mortgage, HSBC, IndyMac, Litton Loan Servicing, Nationstar Mortgage, PennyMac, Saxon and SunTrust.
