Force-Place Insurance

Definition

Insurance the lender purchases on your behalf when you fail to maintain required coverage—like an insurance policy purchased in your name against your will.

Example Usage

When our homeowner's insurance lapsed, the bank force-placed coverage that cost triple the normal rate.

Origin

Banking term developed after defaults increased in the 1990s

Fun Fact

Force-placed insurance is often extremely expensive and primarily protects the lender's interest, not the homeowner's.

Source: Federal Reserve Mortgage Lending Standards

Related Terms

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titleholder

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soft costs

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