It’s time to take a look at the basics of insurance forms so you can understand how it is the banksters commit fraud and charge you erroneous premiums. Whether you have a bank loan for a house, condo, mobile home, townhouse, automobile, farm/commercial equipment, or a commercial property, you are required by the terms of your loan to carry insurance of some type. The Acord form may look familiar to you:
This is a generic form utilized by the majority of insurance companies for all types of correspondence, however some companies do utilize their own proprietary forms. Either way, here are the basic form types, along with how your loan servicer (listed as lienholder on the insurance document) handles them:
Binder/Application - Typically this form is sent to your servicer to confirm temporary coverage (90 days or less). The form has a bunch of legal information which varies by company, state, and type of lien, but the basic idea is that this document notifies the bank that you have applied for insurance coverage, and they will receive a copy of the actual policy soon.
When your loan servicer receives this document, a hold is placed on your loan to stop any forced Lender Placed Insurance (LPI) activity until the Expiration Date or 90 days from the Policy Effective Date, whichever is sooner. If the servicer does not receive a copy of the policy from you, your agent, or the insurance company prior to this date, an LPI policy will be forced on your account. Whether you have an escrow account or not, one will be created for you, and it will be made negative by this premium, with absolutely NO EXCEPTIONS!
Declaration/Certificate of Insurance/Evidence of Insurance – This is the main form utilized by your insurance company to notify the bank that you have a valid insurance policy. The specific form used will depend on the type of collateral they have a lien on (home, condo, auto, etc). These documents come in many different forms. You may have an umbrella policy (a single policy which covers your home, vehicle(s), etc), a HOA/Master policy (a group policy obtained by an Homeowners or Condo Association), Homeowners, Dwelling Fire, Liability, etc.
Whichever form your insurer uses, you need to be aware of a few important points:
1) The loan servicer will always do everything in their power to ensure they are listed as the lienholder on your policy.
2) If your policy term (Effective Date to Expiration Date) is more than 12 months, your loan servicer will only input a 12 month term. It is important that you send your loan servicer a copy of your policy every 12 months to avoid any erroneous forced LPI activity on your account.
3) If you ever receive a letter stating that you do not have valid insurance, you Must send your loan servicer (listed as lienholder on your insurance policy) a copy of the policy with a print date that is More Recent than the print date of the letter. If not, the servicer will disregard your valid policy and charge you for a forced LPI policy.
Endorsement - This form is similar to the policy form. It notifies the bank of any changes to your policy (effective dates, coverage amounts, etc). The one exception to this rule is a Deletion of Lienholder Interest, which will be discussed below.
Bill/Cancellation – These forms are often interchangeable, as if you do not pay your bill, the policy will cancel. The general idea is that your insurance company sends your loan servicer/lienholder this form when the policy is cancelling for one reason or another.
How a loan servicer treats this form depends on the cancellation date (or billing due date) and whether or not you have an escrow account. If you have an escrow account, and the date is in the future, the form is forwarded to the Cash Management and Distribution Management departments in order for them to issue a check to your insurance company out of your escrow account to pay your bill. In every other scenario, a forced LPI policy is placed on your account effective the date of cancellation, and you are charged for the premium.
This point is where the majority of the insurance fraud by your bank against you occurs. Here’s how:
A Deletion of Interest is printed on a cancellation form, and is therefore treated by the loan servicer as a cancellation.
If you paid close attention to the rules above, the LPI policy that is forced on your account and charged to you is often backdated regardless of whether or not you have a loss. This is a highly illegal practice that will actually be documented on the force placed letter you receive from the loan servicer.
A Deletion of Interest is sent to your bank in the following scenarios (the majority of which are completely out of your control):
Your Lienholder sells your loan to investors
Your Lienholder sells the servicing rights of your loan to a loan servicer
You pay off your loan and file a certificate of lien release
Your Lienholder/Loan Servicer changes processing center addresses or PO boxes
Your Lienholder is bought by another bank
As you can see, without any intervention, miscalculation, or mistake on your part in any way, the banking and insurance regulations set for your bank have now caused your escrow account (whether pre-existing or not) to become negative, even if you already paid off your loan, due entirely to circumstances created by your bank. This occurs tens of thousands of times every single day in our country to honest and hardworking American citizens, causing many to have their home, vehicle, or investment property taken away from them illegally by the bank.
If you are in the position where you may lose (or may have already lost) your property, whether home, auto, or commercial, study any correspondence you have received from your bank. You may have the system-generated written proof of their fraudulent and illegal (per the Gramm-Leach-Bliley Act) activities already in your hand in the form of a force placed policy notification form where the effective date of the policy is older than the print date of the letter itself. Bring this to the attention of an attorney immediately.