Looks like our prediction that shady force-place insurance practices would be the next big scandal to come out of the mortgage crisis is finally ringing true.
Bank of America and Citigroup are at the center of a New York state probe into claims they are among several big banks that have been overcharging consumers for insurance, Reuters reports.
In case you're scratching your head, here's the deal with force-place insurance: When homeowners stop paying their home insurance, banks get to charge them with their insurance policy of choice. Usually, they'll send several notices to consumers in advance before finally implementing the new policy. These force-placed policies cost as much as 10 times the market price and although they're meant to protect the investors in mortgage-backed securities, they often just drive people into foreclosure….
Read more: http://www.businessinsider.com/rumor-has-it-bofa-citigroup-are-among-the-targets-of-a-new-york-insurance-fraud-probe-2012-1
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