Last week, attorneys for homeowners disclosed that the Charlotte, North Caroline-based Bank of America has agreed to pay $228 million to settle a proposed class-action force-placed insurance class-action lawsuit.
Although Bank of America spokesman Richard Simon said “Bank of America believes that its lender-placed hazard insurance practices comply fully with state and federal law, nevertheless, in order to put an end to this litigation, we have reached a settlement that is acceptable to all parties.” In other words, Bank of America has not admitted to any wrongdoing and would rather pay than go to trial.
QBE Insurance Corporation, the other defendant in this lawsuit has not commented. QBE will be paying an undisclosed portion of the $228 million. QBE – Query by Example is Australia’s largest global insurer providing insurance services to Australia, America, Europe and the Asia Pacific region.
The settlement was reached in a Miami, Florida federal court last month, two years after the lawsuit was filed, and is the latest in settlements involving force-placed insurance. Attorneys will seek as much as $16 million in fees according to the filing.
The settlement covers the time period between January 2008 and February 2014. Bank of America clients who were part of the settlement are expected to recover hundreds, and in many cases, thousands of dollars. The lawsuit claimed the defendants profited from the force-placed insurance with “kickbacks, commissions, or other compensation”.
Wells Fargo & Company, HSBC, JPMorgan Chase & Co. and Citigroup Inc. have also agreed to similar settlements. Chase will pay $300 million, Citigroup – $110 million and HSBC agreed to pay $32 million. Wells Fargo’s settlement amount has not been specified as of this date.
Force-placed insurance, also known as lender-placed or creditor-placed insurance, can be added to your property by your lender to provide additional insurance, or what your lender feels is more adequate insurance. The lender can add this insurance without the homeowner’s knowledge or permission and charge for the coverage. The extra cost is typically added to the loan. Force-placed is expensive and often pushes an at-risk homeowner into foreclosure due to higher monthly payments. Force-placed insurance normally provides less coverage to the homeowner because it doesn’t cover liability or the borrower’s personal property.
In recent years, there have been claims of an alleged “cozy” relationship between the banks and the insurance companies. There have been allegations of ‘money under the table payments’, with the costs passed on to the borrower in the way of inflated premiums. In one lawsuit, the homeowner was forced to provide flood insurance 14 times the amount of what he owed. Neither his mortgage or loan documents required him to have flood insurance.
Keith A. Gantenbein, Jr. is a licensed, Colorado foreclosure defense attorney and real estate attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes foreclosure prevention, judicial foreclosure, Colorado HOA foreclosures, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. He also defends homeowners against HOA claims in HOA lawsuits, handles real estate closings, title issues, lien issues, quiet title, real estate contracts, bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant.
If you think you will be facing foreclosure in Colorado, or are in the foreclosure process, or have had a wrongful foreclosure, contact Colorado foreclosure defense attorney Keith Gantenbein at (303) 618-2122 for a one-hour consultation, where he will discuss your situation and go over all your options with you.
Gantenbein Law Firm practices Colorado Real Estate law, Colorado HOA defense, Colorado Business Law, Credit Dispute and Repair, and Wills & Trusts. For more information regarding these areas of law, and Colorado foreclosure defense, Visit our website: www.gantenbeinlaw.com
Gantenbein Law Firm also specializes in Colorado Tax Law. If you are facing a IRS tax audit, or other IRS tax issue, or need tax planning, contact our Denver Tax attorney at 303-618-2122, or visit our Colorado Tax attorney website by clicking here.