What's w these new mortgage lenders being so shady?

[FlyingPiggy]

In the last 15 yrs my mortgage has been passed along to multiple mortgage lenders. And each one seems to be worse than the previous. This NewRez lender first contacted me stating I didn’t have homeowner’s insurance (I have it). State farm contacted them and let them know directly that I do in fact have insurance on my home. I now get a message that they are holding out $$ for homeowner’s insurance for me that they are about to pay FOR ME. Ugh. They do not have authorization to do any of this. Is there a place I can report them to?

[WhiteTara]

1. CFPB

[Yavin4]

4. Better hurry. n/t

[WhiteTara]

7. yep. Gone tomorrow.

[FlyingPiggy]

15. I've filed a claim. This is shady as all get out.

[ProfessorGAC]

2. Many Mortgage Companies Do That

The monthly payment to the lender included a monthly escrow which was, after 12 months, used to pay tge property taxes & insurance.
And this isn't a new thing. We paid off our house over 24 years ago. (July of 2000)
What you describe seems like a long-standing practice to me.

[getagrip_already]

3. Insurance? Really?

Thats the first ive heard of that.

Pit (principle, interest, and taxes), yes, but ive never heard of with holding insurance.

I have had to provide proof of insurance to get a loan, but never heard of them escrowing funds for it.

Whats next? Water, sewar, electric, internet, cable?

[ProfessorGAC]

5. Yep!

As I said, this was a few decades ago. We got our last mortgage in 1987.
I also had a different perspective. I found it a convenience at that time.
There was a pretty big "penalty" for paying insurance monthly instead of yearly, but paying into an escrow avoided the penalty and, for 12 years, I never had to worry about paying the premium on time.
Today, of course, insurers do direct pay from checking monthly & the "penalty" is not even $2 per months.
If that sort of thing had been available 37 years ago we may have done it.
You see it as a bad thing. We did not.

[Callie1979]

6. Its common for years to escrow Ins & tax payments. But yours sounds different

Are you saying they are going to get the insurance themselves or they're going to pay your current policy FOR you by escrowing?

[Attilatheblond]

8. At 71 years old, I have NEVER heard of a mortage company that DIDN'T include insurance and tax escrow fund

They need to make sure a borrower does not default on taxes and that property is insured. Weird that this is 'new' to you.

[obamanut2012]

9. I've owned home in three states

l different mortgage companies, and they all did/do that.

[Intractable]

10. I hate to tell you, it's "PITI". Principle, interest, taxes, and insurance.

I've printed training documents for mortgage brokers. The docs say PITI. Don't know much else about it.

[getagrip_already]

11. I piti the fools.... lol

But point taken. Now i know. Just never heard of it before.

Can you stil shop for your own policy or do they force one on you?

[Intractable]

12. I can't answer. Sorry. I just print.

[hatrack]

21. It was "PITI" with us - Principal, Interest, Taxes, Insurance

We took our mortgage out in 2005 and this was explained at the get-go. Not that there aren't shady mortgage companies out there, God knows . . . .

[FlyingPiggy]

16. In all my experience w various lenders, not once has this been done.

I roll my property taxes on to my mortgage but not my homeowner’s insurance. Never. And I have never had any lender confuse this or do anything like this.

[ProfessorGAC]

17. And, We Experienced Tge Opposite

And, I was on the Board of a large community chartered credit union. (And, they did bundle and sell of mortgages, so we had contact with large mortgage firms. )
It was typical to do this.
You shop for your own insurance, can change carriers at any time, but the monthly payment was rolled in.
You say you never saw this. I saw it all the time. So, there we stand.

[FlyingPiggy]

18. Even after you submitted proof of insurance?

[ProfessorGAC]

19. We Didn't

We started out with it all rolled up. Same with those mortgages originated while I was a board member.
So, we may be comparing apples to oranges.

[PeaceWave]

13. The lender has a right to impound for insurance. Their investment needs to be protected.

[FlyingPiggy]

14. There was ALREADY insurance. Proof was given to them. And they STILL collected money for homeowner's insurance

I understand you HAVE TO have home owner’s insurance. That was never in question.

[Pinkpenguin43]

20. Its called Lender Placed insurance

When you get a mortgage loan, you sign in agreement to maintain adequate insurance on the property. This can include a wind or flood policy, depending on your location.

While you get to choose the policy and insurer, the cost is typically escrowed and paid via your mortgage payment. Each year, the lender must receive an updated copy of your policy. If they do not, they will notify you and let you know that if they do not receive the copy of your renewed policy, they will have to procure a policy for you.

This Lender Placed policy is issued without the benefit that an insurer would normally have to assess risk. Because of this, the premiums are quite high.

All you need to do is call your insurance company and ask them to fax a copy of your renewed policy to the lender's/servicer's Hazard Insurance department.