Monday, July 2, 2012

BofA Tagged With Suit For Role In Alleged Force-Placed Insurance Racket; Plaintiffs Seek Class Action Status

In West Palm Beach, Florida, Bloomberg reports:

  • Bank of America Corp. (BAC) was sued in a Florida federal court by homeowners who allege the company overcharged them for so-called force-placed insurance.

  • Force-placed insurance, which mortgage companies can purchase for homeowners when their policies lapse, is a “financial windfall” for Bank of America, according to a complaint filed yesterday in West Palm Beach.

  • A substantial portion of the premiums are refunded to Bank of America or its affiliates and subsidiaries through various kickbacks, reinsurance and/or unwarranted commissions,” according to the homeowners, who seek to proceed on behalf of a U.S. borrowers who were charged for the insurance by Bank of America or an affiliate.
  • Joseph Gallagher, one of the Florida plaintiffs, was charged $4,491 annually for his force-placed policy even though he already had insurance, according to the complaint. The force- placed policy, which only covered wind and hail damage, was twice as expensive as Gallagher’s regular, comprehensive insurance policy, according to the complaint.

  • The premium payments for the force-placed policy were added to Gallagher’s monthly mortgage payment, which contributed to his home going into foreclosure, according to the suit.

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