re: Flood Insurance Fraud Story-You aren't going to believe this one.

Just a little devils advocate here. It has been said that no way the flood insurance was not likely 3k, probably much less. Do you think a licensed broker and agent is going to risk it all over stealing a few hundred dollar flood insurance premium?

i would tend to agree but its mostly likely negligence/incompetence...

You'd be surprised.

And also, sometimes it is based on pure negligence that these things happen and it isn't some purposeful act to defraud the other party.

That being said, this guy should lawyer up and let's see what the AG, LDI, and CFPB have to say about the situation. None of which any mortgage originator or title company wants anywhere around their operation if they are doing nefarious things

This wouldn't happen to be Intelligent Mortgage, would it? Because I've had experience with them and let me tell you, their name is very ironic.

Anywho -- this doesn't smell right. When a flood policy is set up, the producer/agent either selects the standard 30-day waiting period or if the house is in a flood zone, the lender is requiring immediate protection - therefore the producer/agent selects lender-required, making the policy effective on the date of closing.

If the money is never received by NFIP, usually within weeks, then a cancellation letter would've been sent to your friend. If he never got one, the policy was in force. If he did, then either his lender or agent (in this case the same guy) is on the hook and absolutely must be sued.

The agent sounds very fishy and is one of those agents who give the entire insurance industry such a bad reputation.

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please tell me about what other pay plan options offered?

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There are no other premium modes available for NFIP Policies. At closing an entire year is paid up front. Now, if in a non-X zone, then the mortgage company will require the next year's premium to be subject to monthly escrow (if an escrow is required on said mortgage) and that in effect makes it sort of like a monthly prepayment of the policy coverage.

I guess what I can't understand is this: $3,000 at closing was required to be paid to bind the flood policy. Where did that $3,000 go? I am currently in an non-X zone and at closing of my house I had to sign paperwork indicating I accepted the policy and I accepted the costs of the policy. Further, I accepted that if for some reason the policy was not paid, that the mortgage company had the right to take out a policy for me and it would charge me for said policy.

Even if this was gross incompetence and not fraud, where did the $3,000 go? I refuse to believe that given all the parties involved in the transaction of closing a house, that the money just was misplaced.

Obviously the policy was never bound, as if it was bound, there would be a cancellation notice issued for non-payment. Which makes me believe that a policy was never applied for. If that's the case, and yet the mortgage broker / insurance agent provided the bank and the closing company documents indicating a policy was indeed set to go in force... that is absolute fraud.

Given that... it's not impossible to think that at funding of the mortgage, $3,000 was wired to the agent/broker, for the purposes of paying for the coverage, who then just pocketed the money. That's the only way this makes sense.

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Obviously the policy was never bound, as if it was bound, there would be a cancellation notice issued for non-payment. Which makes me believe that a policy was never applied for. If that's the case, and yet the mortgage broker / insurance agent provided the bank and the closing company documents indicating a policy was indeed set to go in force... that is absolute fraud. Given that... it's not impossible to think that at funding of the mortgage, $3,000 was wired to the agent/broker, for the purposes of paying for the coverage, who then just pocketed the money. That's the only way this makes sense.

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This.

Since he never received a cancellation notice, it was never procured in the first place. However, let's be careful what we accuse the agent of - was it fraudulent? Perhaps, but there ain't no insurance for that. Keep it to a negligence E&O claim if this guy wants any actual recourse out of this mess.

If what is being alleged is true, either your friend had the unfortune to be the first victim of a growing fraud, or, there are many other cases of fraud out there.

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What if we find out that Tom can produce a cashed check for flood insurance made out to an insurance company that isn't actually an insurance company, but actually the name of the originator's LLC that is ostensibly an insurance brokerage? An LLC name that happens to be suspiciously close to the name of a former fortune 500 company that could easily dupe a person?

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Wait, was this policy supposedly purchased "POC" - i.e. Paid Outside Closing? I didn't think you can do that on lender-required insurance, however, that's the only way I can think that a separate check would have been made payable directly to the insurance "broker"?

You have us intrigued.