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Mortgage Co. Failed to Pay Insurance

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Junior Member
What is the name of your state? Alabama

Property damage as a result of Hurricane Ivan caused me to file a claim with my Homeowner's Insurance Company. You can imagine my shock when I was told that my insurance had been cancelled in June! The mortgage company failed to pay the annual premium in full and the insurance company took that opportunity to cancel the policy.

The insurance company says they sent me a letter but it went to an old address and was never forwarded by the post office. The mortgage company didn't contact me regarding any issue with my insurance either.

The problem was that the insurance company raised the 2004 premium by $68.00. The mortgage company paid them the amount of the 2003 premium. Apparently, the mortgage company was unaware of the policy cancellation, also. They admitted receiving a check for $1339 from the insurance company marked "refund for overpayment" and promptly deposited the money in their bank account (not my escrow account)! No bells or whistles went off to suggest that maybe there was a problem.

Now, the mortgage company has sent me a letter stating that they obtained forced insurance coverage on the dwelling because I had failed to keep insurance in effect on my property as agreed in the mortgage! To add insult to injury, they sent the letter only after I called them to find out what happened and what they were going to do about it! They placed a policy and took the money to pay for it from my escrow account. Of course, that policy does not include liability, personal property, or other structures coverage like my original policy did. In the meantime, I have losses that are not covered.

My question is about the fiduciary responsibility of the mortgage company. What laws, if any, pertain to the mortgage companies failure to pay my insurance? What recourse do I have other than taking them to court? I doubt that I have deep enough pockets to do that anyway. Any advice is appreciated.

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