When a person takes out a mortgage that requires a property insurance that protects the insured and the lender and allows that insurance to be paid out the lender may place an insurance himself and charge the borrower for the premium. Since compulsory insurance does not benefit from insurance companies, the costs of a compulsory insurance policy are usually much more expensive than a commercially obtained homeowners policy.
Marsha Lane Jewell v. Barclays Capital Real Estate, Inc et al. ., A156526, Court of Appeal of the State of California First Appellate District Division One (August 14, 2020). Mrs. Jewell was beaten by his lender and its management company, and in October 201
In December 2005, the appellant took out an adjustable rate loan of $ 315,000, secured by a trust in her home. When interest rates rose, she could not pay the new monthly amount and tried to get a loan modification. The complainant was told that she needed to go to court for two months to get a loan modification. By acting on this advice, she ceased to pay her mortgage and her voluntary risk insurance policy ceased due to non-payment.
When a borrower does not pay insurance, it is common for the lender to protect the collateral by purchasing risk insurance. In May 2008, her insurance company, Allied Insurance, informed the lender that her insurance policy had been terminated for failing to pay. The lender received its own risk insurance in May 2008 and debited the complainant's account of $ 5,579.68 for the insurance premium.
Against a threat of bankruptcy, the lender agreed to change her loan if she did not file for bankruptcy. Her loan was to be revised to provide a $ 1,974 monthly payment, which included $ 350 for estimated waste / barrier costs. She was told that the loan had been approved but it would take a couple of months to get the contract to her because they were very busy.
In March 2009, the lender debited the complainant's account for an additional compulsory insurance premium, this time in the amount of $ 5,617.83. The policy covered the period from 22 March 2009 to 22 March 2010.
One of the complainant's objectives at the trial was to show that she was unfairly charged with compulsory insurance. On November 7, 2018, the trial submitted its statement of decision. It established that the lender had breached the agreement to amend the loan in December 2008 and breached UCL. The court ordered $ 139,197 in interest costs to be deducted from the current loan balance, representing interest incurred since the lender ceased to accept the appellant's mortgage in October 2009. The court concluded that the appellant was not entitled to any reduction attributable to the purchase of risk insurance.
In its statement of decision, the court explained why it refused to include a credit for the compulsorily insured insurance premiums in its claims calculation. One of the documents required to be submitted by the plaintiff during this process was the declaration page for her current homeowner's insurance. Instead of a declaration page, the plaintiff submitted a quote from Steven Hom Insurance Services for a new insurance to be issued by Allied Insurance with an annual premium of $ 674. The court concluded that the evidence was not sufficient to show that an insurance existed because a an offer from an insurance broker is merely a statement that an insurance company would consider an offer to acquire insurance, or that the lender had an obligation to purchase an allied insurance policy on her.
When the trial asked the complainant if any payments had been made on an alliance policy between December 2008 and August 2009, she offered an exhibition which she claimed showed that Allied Insurance had been paid $ 674. The exhibition is a transfer from Allied Insurance regarding the policy August 2009-August 2010 which shows a credit of $ 201 on her premium. In her testimony, however, she could not show who, if anyone, had paid for the insurance.
Under the trust protection, the lender was authorized to purchase compulsory insurance when there was no coverage, and it did. The absence of an advisory letter is not proof that the complainant in fact secured a genuine policy.
In addition, the appellant claimed that she was entitled to approximately $ 30,000 in legal costs and legal costs which she was forced to spend on defendant. violations and foreclosure over the years. However, the complainant represented herself during the trial, and she did not at any time submit a request for any legal costs which she had incurred earlier. Therefore, she lost the right to raise this issue on appeal.
Nobody likes to pay the premium for compulsory place insurance. The only way to avoid these payments is to keep in force a commercially available insurance like the police that the complainant had with allies until she stopped paying the premium. She could not prove that the cover existed and as a result she was not allowed to get a credit for the compulsorily insured insurance.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, handling insurance claims, bad faith insurance and insurance fraud almost equally insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney handling attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and firstname.lastname@example.org.
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