Forced place insurance has re-emerged as a problem for homeowners who have insurance but haven't properly informed their mortgage lenders.

There was a story I told on the air long ago where I owned a condo on which I had a condo policy that cost $180. But to my surprise, I got notice from the bank that held my mortgage saying they needed proof that I had insurance.

So I faxed my policy and some paperwork from the condo association as a supporting document over to the insurance office at the bank. The next thing I know, I got a bill from the bank for a $7,800 insurance policy!

That's the idea behind forced place insurance, and it's a money grab by the banks. They use a subsidiary to write a homeowners insurance policy at 10% to 20% the market cost when you already have your own policy in place. It's a reverse form of bank robbery, and it's so profitable to the banks that they just throw your paperwork in the circular file when you send it in to prove that you have coverage.

In my case, I had to fax the paperwork again and call several more times all to no avail. Each time I was told that my responses were never received! So then I sent my paperwork for the third time, this time by certified mail. Again, nothing happened.

Finally, I filed a complaint with, which is the Office of the Comptroller of the Currency, because this was back in the days before the Consumer Financial Protection Bureau.  Only then did the bank back down and send me a letter saying now that I provided proof they would rescind their premium notice!

The ironic thing was I got a letter from the OCC saying that even though I failed to do my part, they would bring the bank to heel for me as a one-time courtesy. Boy, did that burn me up.

Here's the takeaway: You have to be the one to document everything you do when it comes to getting homeowners insurance. And don't put those forced place notices on ignore either!

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