MetLife Home Loans: BAD IDEA

I recently worked with an independent broker to refinance my condo’s mortgage. The broker had locked me in to a good rate with MetLife.

During the refi process, I was notified that I would have to increase the insurance on my condo to 20% of its appraised value. This was due to one line of wording in our condo association’s documents that stated that the master insurance policy was “all-in, minus betterments and improvements.” I was told that because the policy wasn’t “all-in [period],” I’d have to take out this extra insurance.

This didn’t make any sense because, barring some wood floors that were refinished by a previous owner, there had been absolutely no betterments and improvements on my condo since construction. So what exactly was I being asked to insure? Nothing, but I was told that this was non-negotiable, even after getting a letter from my condo policy insurer that there was absolutely no question of coverage of my personal belongings and the aforementioned floors.

I talked to a lawyer who informed me that MetLife’s practice is actually illegal. You cannot ask someone to insure something that does not exist or double-insure the same property. If you do, then this is an incentive to – as crazy as it sounds – burn down your house for insurance. Still, MetLife would not budge. With the prospect of having to pay hundreds in unnecessary insurance indefinitely, I had to stop the refi process, losing out on hundreds in fees.

This ended up being a blessing in disguise because I immediately started the process over again with a local bank. For them, there was no question: “There are no uninsured betterments and improvements? Then your insurance is perfectly adequate.” After my experience with MetLife, it was a relief to work with someone who was logical and reasonable!

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