Affordable Financial Services Comments on NYS’ Proposed Changes to Mortgage Insurance Practices

HUNTINGTON, N.Y. - Sept. 20, 2013 - PRLog -- (Huntington, NY) —Brian Leibowitz, CEO/Owner, Affordable Financial Services, says the proposed changes to mortgage insurance practices will definitely help restore the mortgage lending industry’s reputation but warns that, if the bill becomes law, it may result in an overreach on the regulators’ part.

The New York State Department of Financial Services recently announced that it has proposed rules that would prohibit insurers from issuing policies on properties in which an affiliated company held the mortgage and paying commissions to mortgage lenders or servicers or their affiliates.

In 2011, the agency launched an investigation into the force-placed insurance industry. Banks, lenders or mortgage servicers took out this type of insurance when the borrower does not maintain the insurance required in their term of mortgage due to financial hardships. The DFS found that the premiums on the new policies were two to ten times greater than voluntary insurance and offered less protection. Further, the cost of the premiums shifted to the homeowner.

According to the DFS, the insurers engaged in “reverse competition,” in which they competed for bids with the banks by offering a share of the profits rather than the lowest prices. Whenever a lender purchased a policy from the insurer, the lender received “kickbacks” from the insurance company. The DFS proposals would eliminate these kickbacks and protect the homeowners.

“I applaud the New York State Department of Financial Services for its attempt to cleaning up the mortgage industry,” Mr. Leibowitz says. “Too often, the unethical or illegal actions of a few reflect poorly on the other lenders who provide quality service to its clients. Our company has received an A-plus rating from the Better Business Bureau because of our impeccable customer service.”

However, Mr. Leibowitz says he is concerned that all mortgage servicers will be swept in the other companies under investigation. “We may see the state overreach its bounds and go after all the mortgage companies, including the honest ones,” he says. “The aim of this bill is to crack down on those who engage in this practice, not to charge all industry professionals as guilty until proven innocent.”

For more information, call 1-888-500-0282 or visit www.affordable-financialservices.com.