Sunday, May 26, 2013

Bankster Accused Of Running Florida Force-Placed Insurance Racket Settles Class Action Suit, Dodges Stiff Penalties; Agrees To Cash/Credit Refunds Of 25% Of Premiums; Refuses To Admit Wrongdoing, But Promises It Won't Gouge Florida Borrowers In The Same Way Again

In Miami, Florida, The Palm Beach Post reports:

  • Wells Fargo Bank and insurer QBE have agreed to pay an estimated $19.25 million to more than 24,000 Florida homeowners under a proposed settlement that plaintiff attorneys call “unprecedented.”

    Without admitting wrongdoing, the firms would settle claims they inflated premiums — often to five or six times above normal rates — for “force-placed” insurance. Lenders may impose such insurance in cases where a homeowner falls behind on payments or lets coverage lapse, but attorneys for homeowners have argued such charges have often been abusive and loaded with kickbacks for banks.

    The proposal filed in U.S. District Court in Miami May 13 is subject to a judge’s approval, which the parties are seeking within 60 days.

    Plaintiffs attorney Adam Moskowitz of Coral Gables said the settlement’s cash and credit refunds of 25 percent of premiums represent the highest percentage of any case involving force-placed insurance, to his knowledge.

    “It’s going to have a real impact on people’s lives,” Moskowitz said.

    This case represents a significant settlement in Florida, the biggest market for force-placed insurance, but his firm and others are also pursuing national cases involving Chase, Bank of America, Citi, HSBC and Wells Fargo, he said.

    The plaintiffs filed suit in 2011. U.S. District Judge Robert N. Scola Jr. in Miami ruled the case could proceed as a class-action suit last year.

    After the filing, Wells Fargo said it would no longer take an 11 percent commission on force-placed insurance for Florida borrowers, according to the settlement documents. Insurer QBE Speciality announced it would phase out certain lines of business while affiliate Praetorian Insurance would operate under an 18.8 percent rate cut approved earlier this year by state regulators.

    “We are pleased that we were able to resolve this particular matter,” said Wells Fargo spokeswoman Vickee Adams. “We continue to support programs like our lender-placed insurance services which provide continuous hazard insurance protection for real property owned by our customers.”

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