Mortgage company wants more flood coverage, is this legal?

strat751 · Joined: 25 Sep 2007 Posts: 1 1.86 Dollars($)

I just received a letter form my mortgage company, Chase Manhattan Mortgage Corp, that my current flood insurance policy is not adequate and they are requiring me to raise my coverage by $20000, if I don\'t Chase will obtain the insurance on my behave at a higher rate. My current policy is $4000 over what I owe Chase Manhattan Mortgage Corp on the mortgage. My VA home loan was sold to Chase sometime in 2002 after a year with the original lender. My flood insurance policy has been the same since I purchased the home in 2000.

Is there any guidance you can give me on this matter, I have searched the internet and have found other home owners with flood insurance are in the same situation as I am but no solutions. This seems like a very unfair practice and only benefits Chase and their Insurers.

evolovik26 · Posted: Tue Sep 25, 2007 6:45 pm Post subject:

If the tax assessed value of your property went up then chase might want adequate coverage to replace your home should it be "washed away". It is a good idea to have enough coverage to replace your house should something happen.
Not sure if Chase can force you to raise your coverage without you refinancing or raising your loan amount but stranger things have happened. Flood insurance is a federal program so rules might be different.
First thing to do is to contact Chase Insurance Department ( i got direct number at my office if you need it but customer service should provide ) and ask them to explain in detail why you need to obtain more coverage. (take detailed notes). Then call your Insurance provider and relate the information to them. If both parties in agreement then you might be stuck paying if not you should get the info you seek. Also check with your neighbors to see if their lender requesting them to increase their coverage.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Before raising the insurance coverage with the Chase Insurance Department, even I feel that you should check out with your neighbors if their lenders have asked them to increase their insurance coverage or not. Only then you will come to know if this company is cheating you or not and thus can take the necessary action against them.

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.77 Dollars($)

Hello Strat,

The lender must show you some valid reasons of raising your insurance coverage. Only then can you increase it. But I don't think they can purchase a policy in your name when you are not willing to pay for it. It is indeed unfair and something very illegal.

It is better you talk to a mortgage attorney asap. Something needs to be done before they out a new policy. It seems they can without you signing on the documents!!

Guest 0.10 Dollars($)

First off thank you for the replys.

I have not been happy with Chase since they purchased my loan, it's always something with them everytime I recieve mail for them I always cringe. Why can't I just pay my bill on time every month, like I have been for the last 5 years and just leave it at that.

I know I should raise my coverage but after living on the river for the last 13 years and the house being raised up above any serious flooding, which I've been through, I just can't see the point of it. I have more than enough coverage to cover my loan with chase.

Again thanks for the replys

evolovik26 · Posted: Wed Sep 26, 2007 8:05 am Post subject:

To jenkin 7
A mortgage lender can and will buy an insurance policy if there is not one in place. And the customer will be liable for it since they sighn the disclosure at the closing reguarding this. It is not illegal. The question in this case is how come Chase asking for more coverage then there was previously.

livinginnky · Posted: Wed Sep 26, 2007 8:49 pm Post subject:

I agree you need to find out why exactly they are requesting the additional coverage.

Sometimes flood zones change and can affect the amount of coverage you need.

But you definately need more information than just do it now or else. That has a name it's called strong arming.

Oh and it doesn't ever hurt to record your conversations. You have to make it clear to the other party but since they do it you might as well have your own copies. If they try to bully you for no reason that is not legal.

But if they do have a legitimate reason, you would be better off getting it at a better rate than what they offer.

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.77 Dollars($)

Hello Eugene,

I didn't mean that it was illegal to purchase an insurance policy where there isn't one. What I meant was, it was unfair for the lender to purchase an increased policy in his name when there's already one.

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