mathewbailey08
New member
Hey Everyone, this is a bit of a long story, but I'm hoping someone can provide some direction on our options.
TL;DR - Mortgage company wants to charge us extra for not having flood insurance when we didn't originally need it, only found out about it recently (FEMA map change) and added it after they told us to. Can they do this?
So we've lived in our home for 10+ years. The community was newly built at that time and the builder raised all the properties 7-8' to take us out of the flood zone (AE) and filed an LOMR-F to put us in X. This has been a bit of a pain since when we got our first mortgage, as well as when we refinanced about 5 years ago, we had to jump through hoops proving that we were NOT in a flood zone. Everything was fine until about a month ago.
Our mortgage is with PenFed, and we got a letter from them (or more specifically I believe their outsourced insurance monitoring service mycoverageinfo.com) saying that our flood insurance had 'lapsed' and we needed to get insurance and provide proof of it in 45 days, otherwise they would purchase an expensive policy for us. The letter was dated 11/23, but we didn't get it until the first week of December. Originally, I thought it was the same old problem we had, where they didn't realize we were not in a flood zone. I called and spoke to someone, explained all this, and they said to email our documentation to [penfed@mycoverageinfo.com](mailto:penfed@mycoverageinfo.com) and someone would review it within a week. I did that, but never heard back.
Around the end of December, I get a 'final notice' to buy our own flood insurance otherwise they would charge us ~$2000/year for their own. The letter was more of a plead saying that they strongly recommend us getting our own to save money. At this point, I started doing some more research on the issue and found out that FEMA redid the flood maps around August of last year and we somehow got put into a flood zone. I reached out to FEMA and they said the previous LOMR-F wasn't renewed, which was likely a mistake, and to file a LOMA request to get it fixed. Unfortunately, this process could take months and I didn't have that long.
We decided to just purchase flood insurance in the interim to put the matter to rest with PenFed, and once we get the flood zone issue fixed, we could either drop it or get refunded the difference between AE and X. So we bought a policy on 1/3 for almost $1400 which went into effect on 1/4. We uploaded the info to mycoverageinfo.com and figured we were good to go at this point.
Unfortunately, that wasn't the case. We got a letter yesterday thanking us for showing proof of the new policy, but saying we had a 'lapse' between 10/1/2021 and 1/4/2022 and we either needed to show proof of coverage during this time or be charged $508 as a penalty.
This is insane. We never had flood insurance before, never needed it before, and we got the new policy within the time period they told us to. Now they want us to magically go back in time and get it on 10/1, over two months before they ever told us about the problem.
I called the number on the letter, again I think this is the outsourced company, and explained the situation. They agreed that it doesn't make sense, but said the mortgage contract requires us to have flood insurance if we are in a flood zone, etc. I said that's fine, but we weren't in one and only recently got put into one and are working to get that fixed. She said there wasn't anything she could do, but she escalated the ticket and I should get a response in about a week.
I plan on sending emails out to PenFed directly to try and explain how, IMHO, this situation is ridiculous. We bought a policy we really shouldn't have needed, paid $1400 for it, and now they want to basically fine us over $500 for the period of time before they even told us about the issue. It's bad enough that we had such a large initial OOP expense, but the $500 fine is basically salt in the wound and was never once mentioned in the previous letters.
Is this legal/permitted? Is there anything else we can do to dispute this extra fee if they come back refusing to remove it? The rep I spoke to kept saying "lapse" in coverage, but it wasn't a lapse since we never needed it before and followed their directions to get the situation resolved.
Thanks!
TL;DR - Mortgage company wants to charge us extra for not having flood insurance when we didn't originally need it, only found out about it recently (FEMA map change) and added it after they told us to. Can they do this?
So we've lived in our home for 10+ years. The community was newly built at that time and the builder raised all the properties 7-8' to take us out of the flood zone (AE) and filed an LOMR-F to put us in X. This has been a bit of a pain since when we got our first mortgage, as well as when we refinanced about 5 years ago, we had to jump through hoops proving that we were NOT in a flood zone. Everything was fine until about a month ago.
Our mortgage is with PenFed, and we got a letter from them (or more specifically I believe their outsourced insurance monitoring service mycoverageinfo.com) saying that our flood insurance had 'lapsed' and we needed to get insurance and provide proof of it in 45 days, otherwise they would purchase an expensive policy for us. The letter was dated 11/23, but we didn't get it until the first week of December. Originally, I thought it was the same old problem we had, where they didn't realize we were not in a flood zone. I called and spoke to someone, explained all this, and they said to email our documentation to [penfed@mycoverageinfo.com](mailto:penfed@mycoverageinfo.com) and someone would review it within a week. I did that, but never heard back.
Around the end of December, I get a 'final notice' to buy our own flood insurance otherwise they would charge us ~$2000/year for their own. The letter was more of a plead saying that they strongly recommend us getting our own to save money. At this point, I started doing some more research on the issue and found out that FEMA redid the flood maps around August of last year and we somehow got put into a flood zone. I reached out to FEMA and they said the previous LOMR-F wasn't renewed, which was likely a mistake, and to file a LOMA request to get it fixed. Unfortunately, this process could take months and I didn't have that long.
We decided to just purchase flood insurance in the interim to put the matter to rest with PenFed, and once we get the flood zone issue fixed, we could either drop it or get refunded the difference between AE and X. So we bought a policy on 1/3 for almost $1400 which went into effect on 1/4. We uploaded the info to mycoverageinfo.com and figured we were good to go at this point.
Unfortunately, that wasn't the case. We got a letter yesterday thanking us for showing proof of the new policy, but saying we had a 'lapse' between 10/1/2021 and 1/4/2022 and we either needed to show proof of coverage during this time or be charged $508 as a penalty.
This is insane. We never had flood insurance before, never needed it before, and we got the new policy within the time period they told us to. Now they want us to magically go back in time and get it on 10/1, over two months before they ever told us about the problem.
I called the number on the letter, again I think this is the outsourced company, and explained the situation. They agreed that it doesn't make sense, but said the mortgage contract requires us to have flood insurance if we are in a flood zone, etc. I said that's fine, but we weren't in one and only recently got put into one and are working to get that fixed. She said there wasn't anything she could do, but she escalated the ticket and I should get a response in about a week.
I plan on sending emails out to PenFed directly to try and explain how, IMHO, this situation is ridiculous. We bought a policy we really shouldn't have needed, paid $1400 for it, and now they want to basically fine us over $500 for the period of time before they even told us about the issue. It's bad enough that we had such a large initial OOP expense, but the $500 fine is basically salt in the wound and was never once mentioned in the previous letters.
Is this legal/permitted? Is there anything else we can do to dispute this extra fee if they come back refusing to remove it? The rep I spoke to kept saying "lapse" in coverage, but it wasn't a lapse since we never needed it before and followed their directions to get the situation resolved.
Thanks!