BOSTON – Dec. 6, 2012 – A Florida woman forced to take insurance by her lender alleges the tactic was predatory. A judge rules the case can proceed.

According to Gilman Law LLP, which represents 89-year-old homeowner Celeste Coonan, CitiMortgage force-placed three types of insurance – wind insurance, flood insurance and hazard/fire insurance – from 2009 to the present. The company used insurer Assurant Inc. Each time, Coonan would provide proof that she already had coverage and CitiMortgage would eventually remove the charges.

After it happened several times however, Coonan filed a complaint with the Florida Attorney General, which, according to Coonan’s allegations, led CitiMortgage to review her account, where it discovered that she actually had a brief lapse in coverage. CitiMortgage then charged several thousand dollars to her escrow account. The lender, she says, is now threatening to foreclose if she doesn’t pay the escrow charges.

Lenders use force-placed insurance on mortgaged homes if they believe a property owner has failed to maintain insurance required in the terms of the mortgage contract. Gilman Law says that a recent investigation conducted by the New York Department of Financial Services found that rates for force-placed insurance can be as much as ten times the cost of normal homeowner’s insurance, while offering less protection.

Gilman Law says the study found that two companies –Assurant Inc. and QBE Insurance – control about 90 percent of the force-placed insurance market. In addition to New York, California and Florida are actively investigating the force-placed insurance market.

© 2012 Florida Realtors®