WELLS FARGO MORTGAGE Forced us into buying an additional $103,000 in flood insurance when we had $85,000 Newark New Jersey
I can NOT believe what I'm reading about WFHM. We bought our home in June of 06. We knew it was in a flood zone, so of course we had to purchase flood insurance. We didn't mind as we knew we had to. Our insurance agent told us we need as much insurance as the amount of the loan. So, if our house went down the creek the mortgage company would still get their money.
We were also told that ANY flood insurance company will not pay to rebuild your home if it's lost in a flood. Flood insurance will pay "actual cash value" at the time the home is lost due to a flood. We purchased a $85,000 policy at closing. $85,000 was our home loan. Now, here we have been in our home for over a year.
When our years anniversary took place we got a letter from WFHM saying we need to purchase an additional $103,000 flood policy. If we didn't purchase it within 45 days they would purchase it for us. I couldn't believe this as flood insurance doesn't rebuild. I have been on the phone with supervisors from WFHM over and over again.
I have asked them to show me where in the closing papers it says they can force me to pay additional flood coverage that I will never use as the additional $103,000 wont pay to rebuild my home. Our house payment has gone up by leaps and bounds because of this. They can't show me, all they say is "these are the rules". My insurance agent even went rounds with them, and nothing happened. I have asked that WFHM send me papers stating this raise in insurance, and nothing comes in the mail. They have NOT answered any of my questions, nor proven to me how this can happen.
So, here we are paying for a policy that is now $188,000 and we will never see $103,000 of it if our house floats down the creek. How in the world does this happen to people? How can they legally do this to people? Only WFHM is bennifiting from this, we sure are not.
Tammy
Summerville, Pennsylvania
U.S.A.
1 Updates & Rebuttals
Michele
Des Moines,Iowa,
U.S.A.
From an ex Wells Employee and current insurance agent
#2UPDATE EX-employee responds
Wed, December 12, 2007
HI Tammy,
With all due respect to your insurance agent, from the lender's perspective, it is not the insurance agent who determines the appropriate amount of flood insurance to have on your home. Wells Fargo has specific guidelines set up by Freddie Mac, to whom they sell your loan on the secondary market, that determines how much flood insurance you need to have on your home.
Freddie Mac requires your lender to require you to have flood insurance on your home in an equal amt, or more, than the dwelling dollar amt of insurance on your home, up to $250,000. For example, if your homeowner's dwelling coverage is $150,000, then Freddie requires your flood insurance equal at least $150,000. This is to protect you as well as the lender.
If your home is destroyed as a direct result of flooding, your homeowner's insurance will not pay you anything since homeowner's policies do not cover damages from water. (If you added an endorsement for sewer back up, this would cover water damages on a restricted basis.)
It is true that if it costs more than the amt of flood insurance you have to rebuild your home, then your home will not be rebuilt. You stated if your home was destroyed by flood then you would never see the additional $103,000 in coverage they made you purchase. But actual cash value is not the same as what you owe on the home.
It is the market value of your home. So you would be given a check for the value of your home, up to the flood policy limit. But at least you would have some assistance to pay off your mortgage loan and hopefully some left over to help to replace your personal property, like clothes, furniture, etc. Because your homeowner's insurance will not pay for anything if the loss is the result of a flood. Since you made the choice to live in a flood zone, you should be happy to buy as much insurance as you can get if the unthinkable happens.