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A $31 million class action settlement between Bank of America NA and homeowners who allege they were illegally forced to purchase overpriced and excessive flood insurance was approved by an Oregon federal judge on Thursday.
Plaintiffs in the Bank of America class action lawsuit alleged the lender sent form letters to homeowners and other borrowers claiming that they did not have enough flood insurance because they lived in special flood-hazard areas. But there was no federal requirement for homeowners in those areas to have that extra insurance, according to the class action lawsuit, and Bank of America allegedly ignored proof sent by some plaintiffs that they met the allegedly unnecessary requirement.
Bank of America denies any wrongdoing, but agreed to the force-placed insurance class action settlement to avoid the expense and uncertainty of ongoing litigation. U.S. District Judge Michael Simon certified the Class and preliminarily approved the Bank of America force placed insurance settlement on Sept. 18, finding that the terms were fair, reasonable and adequate.
In addition to the forced-placed insurance class action settlement fund, Bank of America agreed to a series of changes to its insurance practices, including not taking any commission from force-placed flood insurance for three years. It also agreed to not give opt-out letters from the forced policies in some of its future mailings and to refund co-op borrowers for any force placed insurance that was not required by their loans. Up to 30% of the settlement fund, or $9.3 million, will be used for attorneys’ fees, according to the agreement.
Homeowners Were Forced to Purchase Flood Insurance
Force-placed insurance policies, also known as lender-placed insurance, can be added to your property by your lender to provide additional insurance, or what your lender feels is more adequate insurance. The lender can add this insurance without the homeowner’s knowledge or permission and charge for the coverage. The extra cost is typically added to the loan.
Force-placed is expensive and often pushes an at-risk homeowner into foreclosure due to higher monthly payments. Force-placed insurance normally provides less coverage to the homeowner because it doesn’t cover liability or the borrower’s personal property. This has led to numerous lawsuits and class action lawsuits (see if you qualify to join a force-placed insurance class action lawsuit.)
The Bank of America force-placed insurance class action lawsuit alleged that the lender sent customers notices informing them that their flood insurance was inadequate under federal law and their mortgage contract. Bank of America then allegedly required that these customers purchase flood insurance that exceeded the bank’s security interest in the home or the replacement cost of the home. Bank of America misrepresented that the flood insurance requirement was in line with federal laws for hazard insurance. Plaintiffs allege that Bank of America continued to send a series of letters asking customers for more information with the intention to force-place flood insurance.
Essentially, Bank of America allegedly forced homeowners to purchase or maintain an excessive flood policy, and if they refused, would force place that coverage on their property, adding the insurance premiums to the borrower’s loan balance. Unfortunately, for homeowners, forced placed insurance can cost up to ten times as much as policies they could have bought themselves. This has reportedly forced some homeowners to struggle with their debt loads, pushing them toward foreclosure. In addition to force-placing excessive and unnecessary flood coverage, Bank of America has also been hit with allegations that they are receiving kickbacks for these purchases.
The Bank of America Force Placed Insurance Class Action Lawsuit is Larry Arnett, et al. v. Bank of America NA, et al., Case No. 3:11-cv-01372, in the U.S. District Court for the District of Oregon.
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.
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3 thoughts on$31M Bank of America Force-Placed Insurance Class Action Settlement Approved
I FIRST REPLIED TO THIS LAWSUIT LAST SUMMER, AND DEMONSTRATED PROOF OF OUR LONG-TERM MORTGAGE WITH BANK OF AMERICA. PLEASE ADVISE IF YOU NEED OTHER INFORMATION. MY HOME ADDRESS IS 4205 LAKE CHARLES DRIVE, CORPUS CHRISTI, TEXAS 78413, AND MY PHONE NUMBER IS 361-944 2892. PLEASE CONTACT ME ASAP. IF YOU REQUIRE FURTHER PROOF, I WILL SEND IT.
I replied to this lawsuit last summer, and heard nothing back. Our mortgage was with Bank of America for several years in which they forced us to overpay insurance. Please advise me of my status in this matter. If you need more information, please let me know. I sent proof of our mortgage with Bank of America and need to know what else you may need.
How do I join the Bank of America Class Action Law suit for BofA Lender Placed Insurance. Please advise. Because BofA overcharged us with QBE for $6500.00 per year.
Thank you very much!
Carolyn Dawson
832-533-6987