Only a policitican (bureaucrat) could determine, without any facts, the risk of insuring irrespnsible people who don’t bother to maitain insurance on expense collateral they could not afford to replace if damage or destroyed.
That’s not the point. There’s nothing wrong with force-placing insurance when the borrower fails to maintain what the borrower committed to under the loan agreement. But in these cases, the banks or their affiliates were in the revenue chain, receiving commissions from the premiums that were charged for the coverage. That’s the part that was successfully challenged.
The part I don’t get is why Citi is only being required to refund 12.5% of premium when commission was at a rate of 15%, or why 8% of premium has to be refunded for wind and flood placements that Citi received no commissions from. That doesn’t make a whole lot of sense.
You do realize there are regulations requiring an extensive letter notification campaign and continued contact with the borrower in lieu of terminating the loan contract, which is the other option. It’s amazing that regulators create mounds of work and expect it to not cost anything. I guess when you’re constantly spending other peoples money it’s not important to worry about costs.
While it is true that there is an extensive process before “termination” of the loan contract, also known as foreclosure, it is not like insurance where a policy ends with a non renewal notice. There are no endorsements to a mortgage that can be made once the money goes out the door with the exception of loan modification which is recorded where the mortgage is recorded. Which in itself is a ridiculous and lengthy means test given to verify the need for modification. The lender has no idea when the tornado bait customer decides to buy a dog that insurance companies don’t want to deal with, decides to buy a red neck baby sitter (trampoline)or install a particular risky heating device (meth lab) after the mortgage is funded. Having additional regulation sucks, but it’s the price that is paid after private business did not account for their lobbying efforts (redlining in the mortgage industry was allowed until the early 2000’s). I dealt with a lot of this working for American Idiot Gang both on the residential and commercial side of banking and these scum bags regularly used their own affiliates and subsidiaries making money hand over fist
Only a policitican (bureaucrat) could determine, without any facts, the risk of insuring irrespnsible people who don’t bother to maitain insurance on expense collateral they could not afford to replace if damage or destroyed.
That’s not the point. There’s nothing wrong with force-placing insurance when the borrower fails to maintain what the borrower committed to under the loan agreement. But in these cases, the banks or their affiliates were in the revenue chain, receiving commissions from the premiums that were charged for the coverage. That’s the part that was successfully challenged.
The part I don’t get is why Citi is only being required to refund 12.5% of premium when commission was at a rate of 15%, or why 8% of premium has to be refunded for wind and flood placements that Citi received no commissions from. That doesn’t make a whole lot of sense.
You do realize there are regulations requiring an extensive letter notification campaign and continued contact with the borrower in lieu of terminating the loan contract, which is the other option. It’s amazing that regulators create mounds of work and expect it to not cost anything. I guess when you’re constantly spending other peoples money it’s not important to worry about costs.
While it is true that there is an extensive process before “termination” of the loan contract, also known as foreclosure, it is not like insurance where a policy ends with a non renewal notice. There are no endorsements to a mortgage that can be made once the money goes out the door with the exception of loan modification which is recorded where the mortgage is recorded. Which in itself is a ridiculous and lengthy means test given to verify the need for modification. The lender has no idea when the tornado bait customer decides to buy a dog that insurance companies don’t want to deal with, decides to buy a red neck baby sitter (trampoline)or install a particular risky heating device (meth lab) after the mortgage is funded. Having additional regulation sucks, but it’s the price that is paid after private business did not account for their lobbying efforts (redlining in the mortgage industry was allowed until the early 2000’s). I dealt with a lot of this working for American Idiot Gang both on the residential and commercial side of banking and these scum bags regularly used their own affiliates and subsidiaries making money hand over fist