Fannie Mae Pushes Force-Placed Insurance Reform
November 19, 2012
During the bust, a glut of loan defaults coupled with the glacial pace of foreclosures turned forced-place insurance into a market with $6 billion in annual premiums, according to New York's Department of Financial Services. The pricey policies-which American Banker initially reported in 2010 sometimes cost ten times as much as the voluntarily coverage—drew the ire of consumer advocates, who argued that the insurance was actually pushing borrowers into foreclosure. Insurers and banks responded that the premiums were justified by the high risk of insuring in bulk defaulted, and sometimes abandoned, homes.
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