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What: Shares of specialty insurer Assurant
So what: Force-placed insurance -- or creditor-placed insurance as Assurant refers to it -- is homeowners insurance that's placed on a property by the creditor or servicer if the homeowner allows a policy to lapse. The product is essential -- most mortgages require homeowners to keep their homes insured so that if anything happens the collateral (the home) that the bank is lending against isn't impaired. The American Banker article, however, alleges that the industry is riddled with abuses that primarily revolve around insurers paying servicers for the right to provide their force-placed policies and then vastly overcharging for those policies.
Now what: While Assurant may find itself at the center of this controversy since it's a leading provider of force-placed homeowners insurance, if there's wrongdoing, it's not alone. This could also engulf major servicers such as Wells Fargo
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