Impact 5: Tips for dealing with force-placed insurance

PALM CITY, Fla. - Jane Hilderbrandt and her sons, Charlie and Bob, are trying to hang in there like most homeowners these days.

"It's very tight, very tight. But hey, we don't need a whole lot, and I'm a good cook and I know how to do food," Jane Hilderbrandt said.

Jane's son Bob was helping pay the bills until a car accident put him on permanent disability.

That loss of income was tough enough, but add that to increased homeowner's insurance rates, and they reached their breaking point.

"I had paid $2,100 the year before. And she [the insurance agent] got me one for $2,540 so I told her to go ahead with the policy. Anyway I went ahead with this policy and I did not have the cash to pay it," Hilderbrandt said.

It lapsed and Jane says her mortgage company put her in force-placed homeowner's insurance for $4,200 a year. Far more than they could afford.

“When folks don't pay the insurance themselves, banks have to have the property insured," real estate attorney Shari Olefson explained.

Olfeson suggests if you start having trouble paying your homeowner's insurance, it's best to start communicating that to your bank.

"There are no specific programs to help pay for forced-placed insurance per say, but there are resources for homeowners either though your bank, through their proprietary programs either a forbearance where they would stop from exercising some of their rights for the time being or a modification," Olefson said.

Jane said she's struggled dealing with her mortgage company and was recently denied a modification.

“The first thing people really need to look at with a housing related problems is, is this a temporary problem or a permanent problem?" Olefson said.

She suggests several options: selling, a short sale, or even renting out your home and living somewhere else for less.

“The only reason I want to keep this is so I can get to the point where I can sell it and he [Bob] can get his money back," Hilderbrandt said.

“The bottom line is, if it's unsustainable you need to find a long term solution, which usually involves some kind of change," Olefson said.