The Loan Servicer is paid by the Investor to perform any required service on his loan portfolio. They agree on a documented contractual cost to service each loan, along with other parameters in what is called a Service Level Agreement (SLA). The Loan Servicer figures out the most profitable way to utilize its resources and outsources certain specialized functions to third-party vendors. One such process is any operations, customer service, process development, quality control, auditing etc. of insurance and escrow services to an Insurance Tracker company.

The Insurance Tracker has an SLA with the Loan Servicer to provide a lower cost per loan. The Tracker accomplishes this through hidden kickback schemes and by sometimes eating a loss because it doesn't matter. Insurance tracking is less than 10% of Assurant/QBE First's profits. The lion's share comes from their Force-Placed Insurance business. Think about the scenario this creates. These companies are paid $1 to decide whether or not you need their $100 insurance. I can't even blame Assurant/QBE for squeezing every last dime out of the American public at this point.

If you paid me $1 to decide whether or not you owe me $100, I would find the same answer more and more often as the decades pass by too!

A fine won't fix this problem, especially not such an insignificant one. The only way to fix the problem is to disallow Insurance Trackers to act as Force-Placed Insurers. The product of Force-Placed Insurance also needs to be abolished and replaced by a service of Force-Placing Insurance. I'd rather be charged $35 for the convenience of having the bank price shopping insurance for me. They have access to all of the information necessary on the house. They're the ones setting the rules for the insurance companies. They have the market clout. Why is this not happening?

It's only when these types of real changes are implemented that we can truly recover from the crimes the financial sector continues to commit.

Brian Penny is a former business analyst at Bank of America turned whistleblower. He documents his experiences living in a van, working with Anonymous, training to be a yogi, and fighting the banks on his blog.

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