Question by ecemajor: Can our mortgage company require us to go with their insurance company?
We are in the process of trying to refinance with a new mortgage company. We currently have homeowner’s insurance through Farm Bureau Insurance, as well as boat, automobile, and life insurance. The mortgage company we are refinancing with is saying that we must have and escrow account and pay their OWN homeowner’s insurance, instead of Farm Bureau. I don’t want to do this because we get a multi-line discount at Farm Bureau, and I like them. Can they do this?
Answer by Driv3n
I never heard of it
What do you think? Answer below!
I have heard of this if you lose your insurance with your current company, but they usually charge you a ton!! I would be leary of this cause it just sounds like a monopoly.
I’m pretty sure they can’t make you. I’m not certain though.
No, you can have any insurance company you want providing the policy covers what is required by your mortgage company. Don’t let them bully you into using their insurance co., they get HUUUUUUUUGE commissions which are built right into your premium (how convenient).
Absolutely not. Matter of fact, by law, they are required to have you sign an “ainti-coersion” disclosure. It states that they have NOT instructed you to, or required you to use a specific insurance company, to guarantee the closing of your loan. BIG no-no. The law was put in cto protect consumers from companies offering each other kick backs. “send me business, and I’ll send you business”. It is fraud. You are encouraged as a consumer to shop for the best deal. That applies to the insurance company, mortgage company, title company, etc. Kick backs and “steering” is seriously frowned upon by the Department of Banking and Regulations. They are risking their license.
You must have mis-understood..they may just asking you to set up an escrow account ..it does not mean you have to change insurance companies…escrow accounts are just extra money you pay and they save for the tax payments and insurance premiums..but you do not HAVE to make one. At least , I have never heard of any mortgage company REQUIRING one with their company.
Why not check with your agent and see what he says. I think that this is in violation of some law but I don’t know for sure, like restraint of trade?
I would take a look at another lender as this one is trying to get paid for something they are not allowed to do. What is probably happening is the Loan Originator,Processor,Officer and Underwriter are getting a kickback from the insurance company. Please report them to HUD as they will investigate what the lender is doing. I’m sure if they are trying to persuade you they have done it many times before to others. You just happen to catch them at it.
I turned in a Major Lender years ago and they were suspended by HUD.
Listen to rob and all that said no!
They want the profits from the ins is all!!!
No, it is illegal for them to require or steer you to use a certain mortgage company.
As far as the escrow account goes, they can require that. You may be able to not escrow your taxes and insurance, but it could cost you an additional ¼ or more added to your interest rate (better to escrow).
If there is a possibility, just cancel the transaction with this company. If this problem is any indication, who knows what else that they are not truthful about.
I hope you are working with a LOCAL BANK or MORTGAGE BROKER.
A mortgage is going to be with you for a very long time and it could break you and your family’s future financial outlook. Don’t let anybody rush you into something that you do not fully understand.
Make sure to price out your loan with your LOCAL banks and mortgage brokers only.
A lot people giving advice on here are also looking to give you a loan (its not advice, its advertising), if they are not local to you and you can’t get to them within 1 hour don’t fall for it. They say they are licensed in all 50 states, what does that mean? Which state do you have to look in first if something goes wrong? KEEP IT LOCAL; DON’T GET RIPPED-OFF BY SOMEONE IN WHO KNOWS WHERE WHICH YOU WOULD HAVE NO DIRECT ACCESS TO.
Remember Buddha’s advice:
“Believe nothing, no matter where you read it or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense.” You are the only “expert” you can trust: All brokers, and every other loan officer guru giving advice here with a .com or contact me at the end is “selling” you something (its not advice, its advertising). Don’t buy “it.”