There are two business models in every loan. Both involve force. When we borrow money, we agree to one of these two models: collateral protection insurance. When we sign a loan contract, we almost always agree to keep insurance in place to protect the lender's interest in the collateral we pledge to get the loan. We further agree that if that insurance ends for any reason, then the lender can force-place insurance to protect its interest in our collateral, and bill us for the new premium.
This book focuses on lender force-placed insurance under residential mortgage loans. The book establishes from the outset that virtually all of the loans we make include our agreement to lender force-placed insurance at our expense.
When we sign loan contracts, we do not usually agree, however, that lenders can take commissions and reinsurance premiums and make other charges, and then have the lender-placed insurance company include these revenues in the premium, and expect us to pay the total bill for this "premium".
The research behind this book rests on public records concerning lender force-placed insurance. It also includes commentary on the issues in newspapers, books, and magazines. For the first time so far as is known to the author, it also includes a thorough review of the Court Files in lender force-placed insurance cases including the National Mortgage Settlement Court File. To the extent that these materials are publicly available, they are available if at all on the Federal Court's electronic Court files offering public access to electronic records ("PACER"). The great majority of LFPI cases are in Federal Courts. Many materials are available in the Court Files despite secrecy obstacles including stipulated "confidentiality" Orders.
Both business models, the one involving open agreements and the other involving alleged extra charges, are functioning today. Part of those models involves a practice of settling LFPI claims rather than trying them in Court or contesting them before administrative agencies. Settlements in these matters never end the practices; settlements only include a temporary moratorium on these practices.
The National Mortgage Settlement did not require anyone to end LFPI practices. It only required that LFPI practices be suspended for a short time. Settlements in individual cases similarly include only a moratorium on LFPI practices for a short time, not a prohibition for all time.
This book concludes with a series of potential recommendations on ending the alleged abuse of LFPI as a way of doing business anywhere in the United States.