March 14 (Reuters) - California’s insurance regulator ordered 10 of the largest forced-place insurers in the state to reduce their rates on their policies on Wednesday, saying the rates charged were excessive.
California’s clamp-down follows moves made by other regulators to rein in forced-place insurance - controversial policies that are purchased by the bank or mortgage servicer on the homeowners’ behalf.
For many homeowners who are required to buy insurance as a condition of getting or keeping a mortgage, there is no choice of insurer, terms or price.
An examination of the insurers’ financial statements showed low loss ratios, indicating the rates may be far too high, California’s Department of Insurance said in a statement.
Last week, Fannie Mae, the biggest source of money for U.S. home loans, said it would seek to oversee such policies and New York State’s Department of Financial Services is said to be probing several large banks, including Bank of America and Citigroup, to see if they overcharged customers for the policies.