Detroit, MI asked in Business Formation, Consumer Law and Insurance Bad Faith for Michigan

Q: Can a Financial Institution in Michigan add "Forced Place Insurance" on an Auto loan in light of the Wells Fargo suit?

On August 20, 2015, I entered into an Used Car Loan with People's Driven Credit Union (PDCU) in Southfield, MI for less than a $20k loan at 2.49% via Champs Auto Sales in Detroit, MI. My down payment was $5k & for six months I made timely payments of $420 ($2,520) then PDCU Forced Placed Insurance making my note $725 per month that I paid for a year ($8,700), [although at this time I was told that this money would eventually be tallied towards my balance] which currently is now $990 per month ($11,880) and I was told by PDCU's Collection Dept that my monthly obligation is expected to go up even further, as PDCU has blocked my access to my online account with them stating that my account is Delinquent. I feel that I'm past my debt and obligation to this loan. Is Forced Placed Insurance legal in Michigan when the debt is not a substantial amount like for an expensive home? My contact information is Ricky Johnson (313) 463-1637. The court in the Class Action Lawsuit in Wells Fargo not

1 Lawyer Answer
Adam Alexander
Adam Alexander
  • Consumer Law Lawyer
  • Southfield, MI
  • Licensed in Michigan

A: If your auto loan has a provision permitting forced-placed insurance it is likely legal and enforceable. Did you let your insurance policy lapse? Or did you not carry the minimum amount of coverage called for in the contract? If so, the CU may be able to force it. I would have to read the contract to give you a definitive response, but the Wells Fargo case involved forced-placed insurance on unsuspecting homeowners where the act was not allowed by the mortgage language. The escalation of your monthly payments is unconscionable and outrageous. But it may be legal, depending on what the contracts say.

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