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Bank of America is now requiring we purchase flood insurance, or get a Letter of Map Amendment (LOMA) from FEMA. They gave me 45 days to produce a policy or a LOMA or they will force a policy at a cost of 6800.00 (and it states commissions will be paid to the writing agent).

I have an insurance quote for 326.00 and am well on my way to getting the LOMA from FEMA, so will not end up paying the 7K, but some things BofA has done and said seem so wrong to me, I wonder if it is actionable.

1. By law, FEMA is allowed 60 days to approve and issue the LOMA, after a survey is done and/or documents gathered and submitted. so that's 60 days MINIMUM, if one managed to get a surveyor and gather documents on day one. 90 days is a more reasonable time frame. BofA KNOWS about the 60 days for FEMA, yet refuses to extend the deadline...they won't budge on the 45 days. That is acting in bad faith, is it not? Perhaps coercive?

2. The forced insurance premium is quoted at 6800.00. The highest estimate for a 200K policy I can find at the floodsmart.gov website is 1400.00. What statute allows them to charge 3x the official estimate, and pay a commission? Again, that very scary number seems bad faith and/or coercive to me

3. The FIRM (Flood Insurance Rate Map) from the FEMA website shows my property as not requiring flood insurance. The licensed flood insurance provider I got the quote from told me flat out that I am NOT required to have insurance according to the National Flood Insurance Programs determinations. Does BofA need to show the documentation they are basing the requirement on?

4. There is no elevation certificate on file. My county did not require one when we built the house because we built it outside of the flood zone.

Keep in mind I have had the mortgage for 2 years, BofA did not require the insurance when they offered the mortgage, though they are allowed to make it a requirement for mortgage approval if they wish. The front of my property, along the road, is in the special flood hazard area. We had a flood hazard determination done post-construction which states the house is not in the flood zone, and this was available to BofA at the time. The flood zone has not changed since they wrote the mortgage 2 years ago.

The letter I got that started all of this does not state it is a lender requirement, but a legal one.

I am mad enough to get an attorney involved, and I have spent many hours on the phone with people from FEMA to my county government, to insurance agents, to surveyors all trying to figure out why I am being required to do all of this.

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The product is called "force-placed insurance" or "forced-placed insurance". I have done a number of these cases (as class actions) and have seen many different policies.

The cost of the insurance alone does not mean you have a good case. Usually, there is a "Master Policy" between the insurer and the lender, obligating the insurer to issue a policy to any borrower of the lender whose private policy lapses. The insurer will argue that the rates charged pursuant to the Master Policy have been approved by the Dept. of Insurance and can't be challenged. It will also argue that the insurance is inherently more expensive because the insurer doesn't get to evaluate the risk posed by the particular insured but must instead cover any borrower whose policy has lapsed.

Whether you have a claim will depend on the exact words in the mortgage permitting the lender to force place. This must be compared with the policy actually selected. In addition, sometimes there are features of the policy that are found to be "unfair" under state law. Finally, there are sometimes very complicated relationships between the Lender and the Insurer whereby money or commissions are exchanged. Depending upon your state law, such an arrangement may be actionable.

If you are able to satisfy the bank's demands and do not have to pay for force-placed insurance, you may not be able to sue. If you are force placed, let me know and I will help you to find an attorney.

Good luck.

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The issue I have with the quote of 6800.00 is that Flood Insurance premiums are uniform through the National Flood Insurance Program, they do not vary between agents/providers. Also, flood insurance in general is a Federal program governed by statute.

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Send a RESPA letter with your questions. Make sure you send it certified and say specifically in the body of the lender

This letter is a “qualified written request” under the Federal Servicer Act, which is a part of the Real Estate Settlement Procedures Act, 12 U.S.C. 2605(e). This request is made on the above referenced account. Specifically, I am requesting the following information:

This triggers the RESPA law and requires the lender to acknowledge your letter within 30 days and answer it within 90. Until they answer your letter they are forbidden by the law to take negative action against you. The penalties for violating RESPA can be very harsh, so even a huge company like BofA rarely will take the chance of being sued over it.

Get yourself a flood policy on your own and notify them as well that you have done so. You may claim damages later for any premiums you have paid that were not required. During that time also get the ball rolling with FEMA to get your flood plain documentation. If you can afford to do so, get a real estate lawyer on retainer and ready to go if BofA acts stupid.

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Already have the application for the insurance policy ready to go if necessary

Already have the documentation ready to send to FEMA to get the LOMA

I will not have it forced-placed, that is not an issue at all.

I just hate the threats, the unreasonable time limit, the outrageous amount listed, and the complete and utter lack of evidence that the requirement is based on any kind of fact, like a revised map for my area showing the flood zone has changed (hint: because it doesn't exist. The flood zone is unchanged on the latest set of maps)

I just want to be a pain in their a$$ somehow, even just waste their time. I will send a RESPA, any suggestions on what I should request?

Oh, and I guess the mtg is "owned" or whatever the proper term is by Freddie Mac, is there anything I can do through them, like complain about their servicer or anything?

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  • 4 weeks later...

Just wanted to thank you publicly, Methuss, for your telling me about the RESPA clause. I faxed my letter to them, as I only had a PO Box for the insurance department.

I just got a response stating that they reviewed their records, and determined I am not in the flood zone and am not required to buy flood insurance (they didn't mention specifics at all). I had already bought it, and had it paid for out of escrow, but am not going to request the refund until I hear back from FEMA on the permanent solution of the LOMA.

I am absolutely sure it was the fax, invoking RESPA that got me any kind of response. They had failed to be even remotely courteous or helpful on the phone for days and days. I had attached the various evidences I dug up showing I was not in the flood zone and quite likely to get the LOMA...not sure if their "records review" was much more than viewing that evidence.

Do you think I should send a qualified written request asking what they reviewed? How about complaining about the phone treatment and their failure to mention alternate review processes and offer me other pertinent information?

Edited by ALVA
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I'm a bit suprised they acted on a FAX. The law requires it to be sent by mail "in writing" for all the protections of the law to be retained.

But, if it worked, huzzah!

The RESPA letter is a powerful tool for dealing with a mortgage holder. Obviously, they would prefer consumers not to know about it because it forces them to answer questions about the mortgage. Since you mentioned an impound account, you will probably want to send a RESPA letter asking for a full audit of the impound account once you have cleared up the flood insurance issue. Impound accounts are main locations of abuse by lenders (the other is variable rate loans where they misapply rate increases or fail to do necessary decreases).

Edited by Methuss
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The law just says "written communication" and that to be "qualified" it needed to have specific questions and requested actions, I looked it up after your suggestion and ensured I included everything needed. Seems to me a fax could/should be considered written communication...at least the law doesn't state mail being a requirement.

Anyway I had never heard of RESPA, it is indeed a powerful tool, and I certainly appreciate you

Edited by ALVA
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Before you will hire an attorney...

Get an elevation certificate ( it is about $400) and show it to the experienced insurance broker. Get a quote from him/her. Then you will decide.

PS. And don't worry about timeframe from BofA. Just let them know you are working on it.

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Sorry, I didn't update the thread very well.

We already bought insurance. Because we are not in the flood zone on the insurance maps, it was only $326 and it was paid from escrow.

After we bought it, BofA "reviewed their records" in response to my faxed request for review with my available evidence (like the FEMA FIRM map and original survey and two separate flood determinations) and now say we are not in the flood zone and don't need the insurance we already bought

It's possible to get a LOMA from FEMA without a survey (I called the map department and got this info), I have already sent off the paperwork. They still may need the survey, but they may not. They will let me know either way. If we get the LOMA we are entitled to a refund for the insurance premium

We didn't want to spend 400 unless it was necessary.

Oh, and it turns out the 45 days is federally mandated, with heavy fines to lenders for noncompliance, which BofA didn't tell me, FEMA did. They absolutely would have forced-placed the 7000 policy on day 46. "We're working on it" was our entire argument for the first 5 days and they wouldn't even explain the mandate.

Edited by ALVA
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Well, those 45 days which are federally mandated only starts count from the day, that there is undisputable evidence that your house is a flood zone. The banks are aware of numerous mistakes, when it comes to flood zone determination.

If you are disputing that, then it is different. I help one of my clients to dispute flood insurance issue for about 7 month with the bank and we won the dispute.

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Well, I guess I "won" in this case. I disputed the flood zone designation and provided evidence. Part of my property is in the special flood hazard area (the 1% zone), we know that, no structures are in the flood zone though. They retracted the flood insurance requirement after reviewing my available evidence, and I have no reason to believe I will not get the LOMA. The LOMA is a permanent designation, so my property will never show up on the radar again regardless of future map revisions.

So, though I am satisfied with the outcome, I am still angry about BofA's behaviors and actions and utter lack of even minimal customer service. I plan to pursue that.

Edited by ALVA
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Part of my property is in the special flood hazard area (the 1% zone), we know that, not structures are in the flood zone though.

Just keep the survey of your property handy, you might need it for future flood zone disputes, if your mortgage will be sold to another lender.

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If we get the LOMA (Letter of Map Amendment) from FEMA, it is a permanent designation as the property being out of the flood zone, which transfers to any lender or anyone who purchases the house.

Did you not suggest your clients get a LOMA once they won the dispute and you had the survey and flood cert on file?

Edited by ALVA
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ALVA,

Keep in mind there is nothing permanent with FEMA. Those maps are changing every few month, so expect future "flood zone" dispute with your lender. If your house is located in a border flood zone, it is almost guaranty that flood insurance issue will come up once in a while .There are a few thing, which are not going to change in your case: survey ( your title insurance company has it) and elevation certificate

( don't order it, but you might need it one day).

Let me know if you need any help.

PS. We won the case with the bank using another method, but it is another story...

Edited by DaveG
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1. By law, FEMA is allowed 60 days to approve and issue the LOMA, after a survey is done and/or documents gathered and submitted. so that's 60 days MINIMUM, if one managed to get a surveyor and gather documents on day one. 90 days is a more reasonable time frame. BofA KNOWS about the 60 days for FEMA, yet refuses to extend the deadline...they won't budge on the 45 days. That is acting in bad faith, is it not? Perhaps coercive?

National Flood Insurance Reform Act of 1994 has everything you need to know. Whether you like their tactics, they were right to note your account and make you do the legwork. It's better to put this onus on the consumer. This is SOP. Sure, they should have given you better, more accountable service, but IMHO, that's their only fault. When you have several hundred thousand employees, some things get lost in translation. Ineffective communication is the #1 cause of concern in a company that size.

FWIW, I would bet 10:1 that your fax invoking RESPA did not scare them of non-compliance. Your fax is probably what got it done, but it has little to do with RESPA... it's just those who answer fax/mail are usually a bit more competent than those who answer the phones. That is all.

Points 2,3,4 are somewhat moot.

So, though I am satisfied with the outcome, I am still angry about BofA's behaviors and actions and utter lack of even minimal customer service. I plan to pursue that.

Waste of time. File a BBB dispute if it gets your rocks off, but really, what are you trying to accomplish?! How litigious have people become? What a joke.

If you don't like their customer service, then re-finance with another lender.

You have a choice with whom you do business.

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National Flood Insurance Reform Act of 1994 has everything you need to know. Whether you like their tactics, they were right to note your account and make you do the legwork. It's better to put this onus on the consumer. This is SOP. Sure, they should have given you better, more accountable service, but IMHO, that's their only fault. When you have several hundred thousand employees, some things get lost in translation. Ineffective communication is the #1 cause of concern in a company that size.

Had they simply stated on one of the numerous calls that the 45-days was set by statute I would have taken a different approach far sooner. Had they had a supervisor return my call as they promised twice I wouldn't have been beating my head against a wall. The lack of basic service is ridiculous.

FWIW, I would bet 10:1 that your fax invoking RESPA did not scare them of non-compliance. Your fax is probably what got it done, but it has little to do with RESPA... it's just those who answer fax/mail are usually a bit more competent than those who answer the phones. That is all.

I tried to get a supervisor of the insurance department on the phone multiple times, and was promised a return call within 24 hours twice. They responded to my fax but not my calls.

I am a customer service professional myself, obviously for a much smaller company, but still the concept is the same. I never lost my temper or raised my voice, and explained why I needed a supervisor as I was aware that level 1s weren't going to be able to answer my questions or address my concerns.

Waste of time. File a BBB dispute if it gets your rocks off, but really, what are you trying to accomplish?! How litigious have people become? What a joke.

The BBB is a joke..they have no regulatory or enforcement power.

I would like to see better service and improved communications and I would like large corporations to act in good faith rather than stonewalling and running their customer around.

At this point, as I am okay with the outcome, and have learned that some of their actions were limited by law, I don't plan any legal action. I am going to purse it through BofA's channels though, to at least see if I can get the evidence and documents the decisions were based on.

If you don't like their customer service, then re-finance with another lender.

I have had multiple mortgages with multiple lenders over the years. The customer service is equally poor across the board, once you have the mortgage (they're great on the sales side of things)

The invisible hand of the free market doesn't seem to work with them.

You have a choice with whom you do business.

True, but refinancing is a big hassle, with no guarantee (heck little probability even) for improving the situation, so why would I go that route?

Edited by ALVA
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.... Had they had a supervisor return my call as they promised twice I wouldn't have been beating my head against a wall. The lack of basic service is ridiculous.

Good point, but true competence is rare in any field. You're demanding way too much of a CSR who makes $13-$18/hour and whose performance is probably weighted heavily toward commission for new mortgage referrals or re-fi more than it is for service.

I tried to get a supervisor of the insurance department on the phone multiple times, and was promised a return call within 24 hours twice. They responded to my fax but not my calls.

This is not unusual. This is basic service center hierarchy... Those who open the mail and pick up the faxes are better trained with more responsibilities and authority to solve your problem to completion.

I am a customer service professional myself, obviously for a much smaller company, but still the concept is the same. I never lost my temper or raised my voice, and explained why I needed a supervisor as I was aware that level 1s weren't going to be able to answer my questions or address my concerns.

I worked in this profession too... for years. Since then, I've also been somewhat involved in call center solutions and systems analysis. The CSR position is odd in that supervisors generally are hired straight off the street, usually with retail experience, often not relevant to the task at hand. They are in their own words "sales champions". In this field, it's not uncommon for the proletariat staff to be far better trained, more experienced, and more knowledgable, et al., than their direct managers. You likely would have been better off asking for a "senior rep", or as you put it a "level 2" or "tier 2". Note: a supervisor/manager is rarely considered a senior rep/level 2/tier 2.... Supervisors are concerned with sales reports and management and rarely know very much, if anything, about production workflows and processes.

This is just the way it is. It's this way at all big companies. This is apparently the model they want b/c it's been that way for years.

I am going to purse it through BofA's channels though, to at least see if I can get the evidence and documents the decisions were based on.

I'll save you time. It's all automated. They set up a flood insurance vendor and contract several insurance agents at that vendor. Then, that vendor runs a batch through interfaced software. If your account is flagged, a letter is sent to you automatically from a different off-site processing center and your account gets automatically memoed in the bank's mainframe software. At that point, the 45 day counter is in effect. Don't abide by it and you get an expensive force-placed policy.

Just as the controls on AVM appraisals for collateral are purposely set 10-20% too low, the controls on flood zone determination are purposely set 10-20% too "high". If you ever do get to the bottom of it, all you'll find is that the insurance company is fully certified to determine your risk from an actuarial and government-licensed perspective.

Good luck getting that far... Perhaps, if you write him a letter, Ken Lewis could tell you how his company's products work in practice... 8-)

Kenneth D. Lewis

Office of the Chairman

Bank of America Corporation

Bank of America Corporate Center

Charlotte, NC 28255

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I'll save you time. It's all automated. They set up a flood insurance vendor and contract several insurance agents at that vendor. Then, that vendor runs a batch through interfaced software. If your account is flagged, a letter is sent to you automatically from a different off-site processing center and your account gets automatically memoed in the bank's mainframe software. At that point, the 45 day counter is in effect. Don't abide by it and you get an expensive force-placed policy.

Just as the controls on AVM appraisals for collateral are purposely set 10-20% too low, the controls on flood zone determination are purposely set 10-20% too "high". If you ever do get to the bottom of it, all you'll find is that the insurance company is fully certified to determine your risk from an actuarial and government-licensed perspective.

Insurance determinations were actually part of my evidence, when I called NFIP agents for quotes I was listed as "X", not in the flood zone.

I would like to know what records were reviewed to reverse the original determination. Do you think I can get an answer?

ETA: As far as reps, I was calling the Insurance department specifically and asked for an insurance supervisor. I guess I shouldn't have assumed they differentiate and specialize their CSRs, as I do, and I was just routed to the big room.

Edited by ALVA
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Insurance determinations were actually part of my evidence, when I called NFIP agents for quotes I was listed as "X", not in the flood zone.

I would like to know what records were reviewed to reverse the original determination. Do you think I can get an answer?

LOL, it's hard to say. I would guess it depends upon what notes were made in your file by whoever received your fax. I assume it didn't go above that person's head, especially since your problem was fixed so quickly once you sent the fax.

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Somewhere buried in the small print of their original offer and all subsequent mortgage terms and conditions I have a sneaking suspicion that they have covered their donkeys and are able to do this. No matter how distasteful that may be.

If they have not then any action against them will result in their insurer settling then using subrogation rights to recover from the E&O carrier of the draftsman. :dunno:

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They can make it a lender requirement initially, as a term for offering the mortgage, but after that it is not discretionary (I checked my contract).

However, if there is a flood map revision by FEMA, they can, and in fact have to, send the letter requiring insurance or a LOMA. There is also a review process, but they are not required to inform about that apparently.

So, this can happen again, the next time FEMA revises its maps. If I get the LOMA, I can just send it. But if I don't get the LOMA, for whatever reason, I want to know what docs to have them review, so I can send in the request immed, and not have to frustrate myself talking to idiots next time.

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