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.

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• 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.

For more, see Bank of America Sued by Over Force-Placed Insurance Costs.