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Started By
Message
Flood Insurance Fraud Story-You aren't going to believe this one.
Posted on 8/22/16 at 2:44 pm
Posted on 8/22/16 at 2:44 pm
I apologize in advance for incomplete information and my lack of expertise in this area. I come to this board humbly, for clarification.
My buddy Tom took five feet of water on a house he closed on six months ago. He's relieved because he has flood insurance since he's in a flood zone. His mortgage originator (just so happens to be an insurance agent also) arranged it for him, and it was a line item on the mortgage. The cost he thinks was $3000. (I only heard the story-I have not seen the docs). It's included in monthly escrow, he was told.
He calls the loan originator from the mortgage company and the loan originator says "I'll be right over". He arrives and tells Tom that "he made a mistake and screwed up" and "the money disappeared" and there is in fact no coverage. He swears he doesn't know where the money went.
The loan originator then said "you have two choices-you can sue me or I can refund the 3,000 back to you".
I of course referred Tom to The Louisiana Department of Insurance and their fraud division. From hearing Tom's story it seems likely that the mortgage originator stole his premium and never secured the policy. The odds of this being an honest mistake seem nearly implausible.
Thoughts from those of you in the mortgage/insurance/legal professions? My guess is that somebody here winds up wearing prison orange. How is a consumer protected in this scenario? Where the heck is the title company in all this? What am I neglecting to understand in this scenario?
My buddy Tom took five feet of water on a house he closed on six months ago. He's relieved because he has flood insurance since he's in a flood zone. His mortgage originator (just so happens to be an insurance agent also) arranged it for him, and it was a line item on the mortgage. The cost he thinks was $3000. (I only heard the story-I have not seen the docs). It's included in monthly escrow, he was told.
He calls the loan originator from the mortgage company and the loan originator says "I'll be right over". He arrives and tells Tom that "he made a mistake and screwed up" and "the money disappeared" and there is in fact no coverage. He swears he doesn't know where the money went.
The loan originator then said "you have two choices-you can sue me or I can refund the 3,000 back to you".
I of course referred Tom to The Louisiana Department of Insurance and their fraud division. From hearing Tom's story it seems likely that the mortgage originator stole his premium and never secured the policy. The odds of this being an honest mistake seem nearly implausible.
Thoughts from those of you in the mortgage/insurance/legal professions? My guess is that somebody here winds up wearing prison orange. How is a consumer protected in this scenario? Where the heck is the title company in all this? What am I neglecting to understand in this scenario?
This post was edited on 8/22/16 at 3:21 pm
19
Posted on 8/22/16 at 2:46 pm to Lsupimp
Jesus, I have a hard time believing this story but if true, there are some really sick people in this world.
Posted on 8/22/16 at 2:50 pm to Civildawg
Tom told me this story personally. I have the name of the mortgage originator. I googled him. He sells insurance too. All the names of the companies aligned. I then called a mortgage company guy I know that knows everybody in the industry. He verified that this guy is in fact sketchy as hell and he says he's not surprised.
Posted on 8/22/16 at 2:57 pm to Lsupimp
Is he the town barber too? I'm not in that business but I certainly wouldn't buy my insurance from the same person doing my mortgage.
It certainly seems extremely sketchy for someone to do both.
It certainly seems extremely sketchy for someone to do both.
Posted on 8/22/16 at 3:01 pm to Lsupimp
I know about 1000 lawyers that would LOVE this case.
Posted on 8/22/16 at 3:01 pm to Lsupimp
Your friend Tom closed on the house 6 months ago and he didn't review the documents he signed?
He could have caught this by reviewing the documents
to see if everything was in order.
He could have caught this by reviewing the documents
to see if everything was in order.
Posted on 8/22/16 at 3:04 pm to Lsupimp
Errors and omissions?
Posted on 8/22/16 at 3:04 pm to Lsupimp
Wouldn't the mortgage holder have known the home was in a flood plane and caught the omission when the closing docs got to them? Not pinning the blame on them, but seems they would have caught that.
Posted on 8/22/16 at 3:05 pm to Lsupimp
Sad story if true.
If the flood insurance is truly a line item on the mortgage document, it seems to me, Tom & his employer are liable for failing to bind the policy. This is a RESPA complaint that should leave the mortgage servicer responsible to Make Whole.
The originator's false choice offering is as laughable as it is insulting.
If the flood insurance is truly a line item on the mortgage document, it seems to me, Tom & his employer are liable for failing to bind the policy. This is a RESPA complaint that should leave the mortgage servicer responsible to Make Whole.
The originator's false choice offering is as laughable as it is insulting.
Posted on 8/22/16 at 3:17 pm to lecompteboy
Tom's an extremely simple and agreeable guy. He's definitely not a business savvy guy. He's more of a "trust people" guy. He reviewed them at his closing when he signed all the docs.There was an attorney at the table at the closing company. The docs shows he has flood insurance. It's a line item and denoted with his escrow apparently. He says it says "flood insurance" right there on the closing documents.
Is this fraud or error? The reaction of the originator is classic "consciousness of guilt" type stuff. And if there is one, there are likely to be many more.
Either way imho, somebody besides Tom is on the hook here. Either the mortgage company for their error or the originator for his criminality. Hopefully it is the former and not the latter.
Is this fraud or error? The reaction of the originator is classic "consciousness of guilt" type stuff. And if there is one, there are likely to be many more.
Either way imho, somebody besides Tom is on the hook here. Either the mortgage company for their error or the originator for his criminality. Hopefully it is the former and not the latter.
Posted on 8/22/16 at 3:22 pm to Lsupimp
quote:
His mortgage originator (just so happens to be an insurance agent also)
initials?
Posted on 8/22/16 at 3:26 pm to Lsupimp
quote:fify
The docs shows he was paying for supposed flood insurance
and also, what they hell kind of house he bought for a 3k flood policy in baton rouge area.
Posted on 8/22/16 at 3:29 pm to Chad504boy
My guess is that 3k was the annual escrow total (taxes, insurance, pmi) and that the flood insurance was only part of it.
I'd rather not give initials. Office is in Baton Rouge.
I'd rather not give initials. Office is in Baton Rouge.
Posted on 8/22/16 at 3:29 pm to Lsupimp
You need to tell "tom" to seriously talk to a lawyer immediately and have the lawyer talk to the Insurance guy from now on. I'm not one to go "lawyer up" but it sounds like Tom is too ignorant and trustworthy to take care of himself here.
Why was there an attorney at the table? Is he sure about that? That's odd if so. Who was the attorney for? The title company, Tom, the seller?
Why was there an attorney at the table? Is he sure about that? That's odd if so. Who was the attorney for? The title company, Tom, the seller?
Posted on 8/22/16 at 3:39 pm to Lsupimp
He needs to call the closing attorney he used asap. And hell yeah I'd sue the bastard (and possibly his attorney after I reviewed everything).
Posted on 8/22/16 at 3:42 pm to Shadowlink
E&O about to get dinged up pretty good.
Posted on 8/22/16 at 3:46 pm to Lsupimp
If he is in a flood zone the mortgage company would not have funded without proof of insurance. Did the originator fake this?
Also did Tom ever get proof of coverage?
I got all proofs and forms about a week after closing.
Also did Tom ever get proof of coverage?
I got all proofs and forms about a week after closing.
Posted on 8/22/16 at 3:49 pm to LSUFanHouston
quote:
Did the originator fake this?
well any flood app done (if there even was one) is all subject to payment and anything else needed. If it goes unpaid then its cancelled null and void. but i don't see any proof there was even that done cause all he talks about is seeing flood insurance on hud statement.
Posted on 8/22/16 at 3:50 pm to Chad504boy
Sure but you think the mortgage company would want to see proof of payment and their name on the policy as additional insured.
Posted on 8/22/16 at 3:54 pm to LSUFanHouston
quote:payment would/should have been collected at closing, they could have had the app with mortgagee listed and all but obviously mess ups happened as if Flood app was in place, notices would have went out to all when cancelled.
Sure but you think the mortgage company would want to see proof of payment and their name on the policy as additional insured.
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