US BANK…Not So Fast!

Questions have arisen regarding the rescission by US Bank of an asinine requirement that  its Florida borrowers purchase sinkhole “activity” coverage.  It was the only lender to have such a mandate.  Neither Fannie or Freddie required it of lenders. Eighty percent of those in sinkhole alley insured in Citizens don’t buy it.

Now that US Bank has joined the ranks of the rational, two questions (perhaps more) arise, as follows:

1)  Does US Bank’s rescission apply only to new loans, and;

2)  Who reimburses policyholders for the premiums they paid for a coverage they didn’t want or, maybe didn’t even need? After all, US Bank’s notice is tacit admission it was wrong.

As to question one, I have not contacted US Bank and don’t need (or want) to.  I’ve read the language. It is clear to me (I’m not a lawyer), that its notice applies to all mortgages, not just those effective on or after December 7.  The notice states…

“Effective with loans closing on December 7, 2011 or after, sinkhole coverage will not be required in the State of Florida.”

If you read this as carefully as US Bank wrote it, you’ll see the notice is only saying that the effective date begins at the same time as or “with” new loans closing on December 7, 2011.  And, on that date…”Sinkhole coverage will not be required in Florida.” Emphasis added.

Besides, even if US Bank could know when the coverage is dropped from an existing policy, I seriously doubt it would hold the borrower in default or force place the coverage having rescinded the requirement for others with identical loans.  That’s not only asking for PR trouble, but…for legal action–obviously not from Sean Shaw’s firm.:)

And, why do you think US Bank stated in its notice that the requirement could be reinstated if an inspection reveals problems or if an appraisal reveals “settlement deficiencies”?  It’s obvious to me that was just to give the appearance that the original requirement being rescinded was reasonable.  Heck, if there are “settlement deficiencies” you can’t find coverage anyway; even from Citizens. Get serious!

Now, to the second question above;  “Who reimburses policyholders for the premiums they paid for a coverage they didn’t want or, maybe didn’t even need?”

Remember, we’re not talking peanuts here.  US Bank’s borrowers struggled to pay premiums that were as much as $4,000 per policy–often more than the entire rest of their homeowners’ coverage’s, including wind. Non-US Bank borrowers were never required to buy “activity” coverage.  The law specifically said it was optional.  And again; those who called US Bank and could speak with the right person, were exempt as well.  Is there no penalty for such discriminatory and irresponsible behavior on the part of US Bank?

In the loudest of voices Sean Shaw, Bill Newton and Ginny Stevans spread the lie that homes without sinkhole activity coverage would be foreclosed. I have it in writing from each of them.  Senator Fasano stated it on camera during the sinkhole rate hearing and numerous times in committee hearings. But…it wasn’t true!  Aren’t they even a little bit culpable here?

As a matter of equity, shouldn’t consumers who didn’t know that a phone call to US Bank could save them thousands be reimbursed; especially if they can prove they bought the coverage and never filed a claim?

What’s wrong with advocates who wouldn’t advocate for such reimbursement when, in fact, they are almost as responsible as US Bank?  Why aren’t they working to right this wrong?

Maybe a law firm somewhere will pick up the mantle for the thousands who feel ripped off. But, don’t expect to hear a peep from The Florida Consumer Action Network and Policyholders of Florida; Sean Shaw, Bill Newton, Ginny Stevans, and Senator Fasano.

To help consumers in this case, they’d have to admit they were wrong!

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Comments

  1. Great article again Scott! Earth movement is not covered under the standard HO policy anywhere in America. At least Florida covers cat ground collapse. The rest is either uninsurable or should be priced at actuarial sound rates. One day we’ll start to bring some sanity bank into the HO market in Florida…

    • Yep, and it’s likely that US Bank doesn’t require earthquake, mudslide, or other forms of earth movement in other states. That’s why this whole thing was so sad and why, if I were a US Bank borrower who purchased the coverage, I’d be kinda ticked; maybe I’d even want them to reimburse me.

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