$110M Citibank Force-Placed Insurance Class Action Settlement Reached

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According to court documents filed Wednesday in New York federal court, Citibank NA has agreed to settle a putative class action lawsuit that accuses the bank of profiting by forcing homeowners to carry excessive hazard and flood insurance. Under the terms of the proposed $110 million Citibank class action settlement, Class Members will receive refunds for the force-placed insurance premiums charged by Citibank.

If the Citibank force-placed insurance settlement is approved, Class Members will receive back 12.5 percent of their force-placed hazard insurance premiums, an amount that is equivalent to more than 83 percent of the allegedly unlawful commissions received by Citibank on force-placed hazard insurance by the insurance vendor. Citibank also agrees to refund 8 percent of force-placed flood insurance premiums and 8 percent of force-placed wind insurance premiums even though the Citibank did not receive commissions from these policies.

In addition, the proposed Citibank force-placed insurance class action settlement forbids Citibank and its affiliates from accepting any type of compensation from force-placed insurance policies for six years. Assurant Entities is also prohibited from offering commissions or other compensation to Citibank during the same time period.

The proposed class action settlement also sets limits on the amount of insurance coverage Citibank can require borrowers to maintain, and provides the opportunity for Class Members to reduce their flood insurance coverage if Citibank increased the coverage requirement to a level that exceeds the amount required by federal law. The Citibank force-placed insurance settlement also requires Citibank to make an effort to renew a Class Member’s existing coverage when requested instead of purchasing more expensive insurance coverage.

Class Members of the proposed Citibank force-placed insurance settlement include all persons who were charged by Citibank for lender-placed flood or hazard insurance in connection with a mortgage loan, home equity loan or home equity line of credit secured by property in the United States, unless the charge has been cancelled and refunded in full. To be eligible for the flood insurance class, the insurance must have been placed by Citibank on or after May 17, 2006. To be eligible for the hazard insurance class, the insurance must have been placed by Citibank on or after Jan. 1, 2007.

According to the settlement documents, there are likely to be hundreds of thousands of borrowers who are eligible for refunds from the Citibank force-placed insurance settlement.

This class action settlement is similar to the JPMorgan Chase Bank force-placed insurance settlement, which was preliminarily approved on Oct. 4, 2013.

Details on how to participate in the Citibank class action settlement were not immediately available. Keep checking TopClassActions.com or sign up for our free weekly e-newsletter to receive updates on this case and other class action lawsuit and settlement news.

The plaintiffs are represented by Kai Richter, E. Michelle Drake and Joseph C. Hashmall of Nichols Kaster PLLP; Shanon J. Carson, Sarah R. Schalman-Bergen and Patrick F. Madden of Berger & Montague PC; Kenneth G. Gilman of Gilman Law LLP; and Brett Cebulash and Kevin S. Landau of Taus Cebulash & Landau LLP.

The Citibank Force-Placed Insurance Class Action Lawsuits are Gordon Casey, et al. v. Citigroup Inc., et al., Case No. 5:12-cv-00820, and Celeste Coonan v. Citibank NA, et al., Case No. 1:13-cv-00353, both in the U.S. District Court for the Northern District of New York.

UPDATE 1: Details on how to file a claim for the Citibank force-placed insurance settlement are available here.

UPDATE 2: The Settlement Administrator has posted the following update to the settlement site: 

The date of disbursement to class members who submit approved Claim Forms will be in late March 2015. The date of disbursement to class members who submitted a previously deficient claim that has been cured will be in late April 2015.

UPDATE 3: Payments for the Citibank force-placed insurance class action settlement were mailed March 20, 2015. A second round of payments will go out April 20. Learn more.