New York (STONY1) regulators are looking into whether banks and insurers profit excessively from the insurance polices they require homeowners to pay for when their original coverage lapses, the Wall Street Journal reported.
Financial Services Superintendent Benjamin M. Lawsky subpoenaed agents and brokerages run by large banks about so- called forced-place insurance, the newspaper said, citing people it didn’t identify. David Neustadt, a spokesman for the department, declined to comment on the report when reached by Bloomberg News.
Lenders who require homebuyers to maintain insurance on property that serves as collateral may unfairly force borrowers into overly expensive new policies if their own lapses, the Journal said.
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