Judge Certifies U.S. Bank Force-Placed Insurance Class Action Lawsuit

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A force-placed insurance class action lawsuit involving plaintiffs from 40 different states was recently granted class certification by a federal judge and will continue with its litigation against lender U.S. Bank.

The plaintiff and the Class allege that U.S. Bank was receiving illegal kickback payments by issuing force-placed insurance policies through American Security Insurance Co. (ASIC).

Is force-placed insurance illegal? It is, except for under certain circumstances. According to this U.S. Bank force-placed insurance class action lawsuit, the plaintiff claims that U.S. Bank needlessly and without proper cause force-placed expensive insurance policies on mortgage properties.

Lead plaintiff Stephen Ellsworth claims that U.S. Bank purchased flood insurance from ASIC and force-placed the policy on Ellsworth’s property. Ellsworth further alleges that based on the payments, U.S. Bank significantly backdated the policy coverage and placed the burden of paying for the expired coverage on the homeowner.

According to the force-placed insurance lawsuit, no damage occurred on Ellsworth’s mortgaged property during the backdated coverage period.

As a result of having insurance allegedly force-placed on his property without cause by U.S. Bank, Ellsworth filed this force-placed insurance class action lawsuit on behalf of himself and other similarly situated homeowners in 40 other states who had a force-placed insurance policy purchased by U.S. Bank through ASIC .

In response to the decision to certify this U.S. Bank force-placed class action lawsuit, Judge Laurel Beeler stated that the Class and various state subclasses, “allege a common scheme to force place insurance on borrowers in a way designed to increase kickbacks to US Bank from a captive insurance provider (ASIC) in the form of [qualified-expense-reimbursements] or discounted tracking services, and to maximize costs collected from borrowers by force-placing [lender-placed flood insurance] policies that were backdated more than 60 days.”

A court date has not been yet been set for this multi-state force-placed insurance class action lawsuit against U.S. Bank and ASIC.

The U.S. Bank Force-Placed Insurance Class Action Lawsuit is Ellsworth, et al. v. US Bank N.A., and American Security Insurance Company, Case No.  12-02506 LB, in the U.S. District Court for the Northern District of California, San Francisco Division.

What is Force-placed Insurance?

Force-placed insurance is a practice by banks and lenders of buying additional insurance policies on mortgaged properties that are imposed under certain conditions and then become the homeowner’s responsibility to pay off. While the property is mortgaged to the bank or lender, the majority of home loan providers will require the homeowner to purchase homeowners insurance that will cover the cost of repair resulting from a natural disaster, such as a flood or tornado.

If a bank or lender discovers the current home insurance policy was cancelled, has lapsed, or does not sufficiently protect the property from potential accidents and natural disasters, it is within the lender’s right to take out additional policies and force-place these policies on the home in question.

Is Force-Placed Insurance Illegal?

Force-placed insurance is a legal mortgage practice, but only under certain conditions and certain restrictions do apply. For example, an insurer cannot charge a homeowner more for the force-placed insurance policy than what it would cost to insure the house by any other lender.

Additionally, new laws have been put in place by government officials to impede force-placed insurance abuse, such as a bank foreclosing on a house based solely on the homeowners inability to pay for the force-placed insurance premiums.

Many homeowners across the country allege that their mortgage providers charged extra fees and/or exaggerated the price of the force-placed insurance policy in order to reap more benefits at the homeowners’ expense.

Additionally, the majority of these illegal force-placed insurance policies provide minimal coverage for extravagant prices, thus putting the homeowner at financial risk. As a result, hundreds of homeowners are now pursuing force-placed insurance lawsuits or joining force-placed insurance class action lawsuits.

Join a Free Force-Placed Insurance Class Action Lawsuit Investigation

If you paid for force-placed insurance from a lender, you may be eligible to join a free class action lawsuit investigation into the improper charges you may have paid. Some of the banks being investigated include Ally Financial, PHH Mortgage, OneWest Bank, MetLife Home Loan, BB&T Mortgage, Cenlar FSB, and Third Bank. Submit your information now for a free and confidential case evaluation.