I recently got a mortgage on a condo thru Flagstar Bank. The condo association has a master insurance policy to cover the units themselves and I got another policy to cover my belongings inside the unit. All seemed fine.
A month later I got a letter from Flagstar saying that my insurance coverage was insufficient and that I'd need to greatly increase my personal policy to cover "betterments and improvements" to the unit... If I did not they'd open a policy themselves and charge me for it. I told them my unit didn't have any improvements (upgraded cabinets, granite countertops etc) and that I was fine with the associations coverage. They said it wasn't an option and that basically I HAD TO essentially get a policy to cover improvements that I did not have.
I spoke to my real estate broker, mortgage broker, insurance agent and the homeowner's association and all of them had the same answer: they'd never heard of anything like that and they suspected it might be fraudulent. Flagstar said this clause was in the documents I signed at closing, but when I asked them to provide me with a copy of the doc I signed that tied me to this, they said they couldn't produce it... Amazing. Flagstar, if you're going to rip me off you should at least have your ducks in a row!
Avoid these guys at all costs... I have had a number of mortgages over the years and these guys are the worst mortgage company I've ever dealt with by a long shot.
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