Plaintiffs Want HSBC Force-Placed Insurance Class Action Settlement Approved

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Homeowners who allege HSBC Bank USA NA overcharged them for force-placed insurance have asked a Florida federal judge to approve a class action settlement they say is similar to other lender-placed insurance settlements that have already been approved by the court.

The HSBC force-placed insurance lawsuit was filed nearly a year ago by plaintiff Darlene Diaz, who alleged HSBC and Assurant Inc. improperly benefitted from forcing homeowners to carry overly expensive insurance plans when their policies lapsed. Diaz alleged that HSBC had an arrangement with Assurant and its subsidiaries to artificially inflate the borrowers’ insurance premiums and give kickbacks to HSBC and its affiliates.

Under the terms of the class action settlement, HSBC and Assurant will refund 13 percent of the net annual premium to Class Members who paid their premiums, and 6 percent of the annual premium to Class Members who were charged for lender-placed insurance (LPI) but never made payments.

“This settlement follows substantially similar LPI settlements that this Court has already approved, including the settlement in Saccoccio v. JPMorgan Chase Bank NA,” which was granted final approval by the Florida federal court on Friday.

Following the final approval of the JPMorgan Chase force-placed insurance class action settlement, Diaz and her attorneys filed the motion for preliminary approval of the HSBC force-placed insurance settlement, which she says will provide Class Members “significant monetary and injunctive relief.”

Under the terms of the class action settlement, HSBC will be prohibited from charging homeowners inflated premiums for force-placed insurance. Further, HSBC will be prohibited from accepting any financial interest for force-placed insurance policies, other than the premium itself and the protection provided by the insurance coverage, for a period of six years.

The class action lawsuit asserted claims for breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, violations of the Truth in Lending Act, breach of fiduciary duty and violations of the Florida Deceptive and Unfair Trade Practices Act. Diaz seeks to certify a class of U.S. borrowers who were charged as insureds under a hazard LPI policy by the defendants since Jan. 1, 2005.

The defendants have not admitted any wrongdoing but agreed to settle the class action lawsuit to avoid the expense and uncertainty of ongoing litigation.

Similar force-placed insurance lawsuits are currently pending in Florida against Bank of America NA, Citibank NA, JPMorgan Chase and Wells Fargo NA. They were initially filed by plaintiff Javier Lopez as one class action lawsuit against the five major mortgage lenders, but were refiled as separate actions against each individual defendant.

The plaintiffs are represented by Adam M. Moskowitz, Tucker Ronzetti, Rachel Sullivan and Robert J. Neary of Kozyak Tropin & Throckmorton PA; Aaron S. Podhurst, Peter Prieto, John Gravante III and Matthew Weinshall of Podhurst Orseck PA; and Lance A. Harke, Sarah Engel and Howard M. Bushman of Harke Clasby & Bushman LLP.

The HSBC Force-Placed Insurance Class Action Lawsuit is Javier Lopez, et al. v. HSBC Bank USA NA, et al., Case No. 1:13-cv-21104, in the U.S. District Court for the Southern District of Florida.

UPDATE: Instructions on how to file a claim for the HSBC force-placed insurance settlement are available! Click here or visit www.DiazSettlementInfo.com for more information.

UPDATE 2: The HSBC force-placed insurance settlement received final approval on Oct. 29, 2014.