Anne Bucher  |  September 26, 2013

Category: Legal News

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Wells Fargo LawsuitWells Fargo Bank NA and Assurant Inc. were hit with a proposed class action lawsuit last week accusing the companies of forcing expensive hazard insurance on homebuyers who would not benefit from it.

Delbert Kuehner filed the class action lawsuit on September 18, accusing Wells Fargo of forcing customers to pay inflated prices for Assurant insurance policies, even when the borrowers had existing insurance policies.

“Wells Fargo routinely exceeds the bounds of reasonableness and the spirit, intent and letter of the mortgage contract by force-placing insurance in a manner and in amounts that are not required to protect the lender’s interest in the property,” the class action lawsuit says.

Kuehner claims that he had hazard insurance through Citizens Property Insurance Corp. on his Florida home. According to the class action lawsuit, he paid $2,114 per year. When the policy expired in April 2012, he did not immediately renew it. In July 2012, Wells Fargo placed a new policy on his home, valued at $2,529 per year.

The policy was issued by Assurant through its subsidiary American Security Insurance Co., and was backdated to April 2012. Unlike the policy Kuehner held through Citizens, the Assurant policy did not include wind coverage.

Kuehner’s situation is a reflection of the force-placed mortgage controversy that gained traction during the foreclosure crisis. In certain instances, if a property has no insurance or the policy lapses, a mortgage lender is allowed to impose an insurance policy to protect the borrower’s interest. However, critics of this practice have accused mortgage lenders of colluding with insurance companies to impose overpriced insurance policies on homes to cheat homeowners out of money or induce foreclosure on their homes.

The U.S. Department of Justice identified this practice as a malfeasance practiced by banks in a 2012 settlement with the biggest U.S. mortgage lenders, including Wells Fargo. Earlier this month, JPMorgan Chase and Assurant agreed to settle a lawsuit related to this practice for $300 million.

“Borrowers have no say in the selection of the force-placed insurance carrier or the terms of the force-placed insurance policies. The terms and conditions of the insurance policy, as well as the cost of the policy, are determined by the servicer and the insurer, rather than negotiated between the borrower and the insurer,” the Wells Fargo force-placed insurance class action lawsuit says.

In May 2013, Kuehner signed up for a different hazard insurance policy with Lloyd’s. This insurance policy cost $668 annually and provided a greater ranger of coverage than that provided by Assurance or ASIC. In his class action lawsuit, Kuehner claims that Wells Fargo breached his contract when it placed an overpriced, low-coverage insurance policy on his property. He believes that the company did not act in good faith to protect his interest in his property. Rather, he believes Wells Fargo sought to unjustly enrich itself.

By filing the class action lawsuit, Kuehner seeks a disgorgement of the companies’ profits, an injunction preventing the companies from continuing to engage in these practices and an unspecified amount of damages.

Kuehner is represented by Tod N. Aronovitz of Aronovitz Law and John Allen Yanchunis Sr. of Morgan & Morgan PA.

The Wells Fargo Force-Placed Insurance Class Action Lawsuit is Kuehner v. Wells Fargo Bank, N.A., et al., Case No. 1:13-cv-23364, in the U.S. District Court for the District of Southern Florida.

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7 thoughts onWells Fargo Hit Class Action Lawsuit over Force-Placed Insurance

  1. Grace Smith says:

    United bank Inc. trumps all this. I had perfectly adequate insurance in place at all times. This FACT was agreed to in writing from the bank. The bank hid the fact that they were adding Forced Place Insurance by refusing to send me copies if my statements. The bank ginned up excell spread sheets instead. The added FP Imsurance not once but repeated instances of forced place insurance on a Loan that had ZERO language allowance for it. They placed 1.8 million policy where the loan was not more than 500k!!! This bank didn’t just do this once but multiple times in one year. Then at the exact same time added another policy for an additional 1.8 million in coverage to my mortgage !!! The bank had a total of 3.6 million in coverage on structures worth no more than 1.2 million. They charged me in one month almost 19,000 on a note where the normal amount due each month was less than 2900.
    This bank used this additional amount to destroy my credit saying my HELOC was late three months in a row.

    This same bank ‘lost’ payments by leaving the checks on their bank vault shelf and ‘forgetting’ them. Same bank would not credit payments for ten days adding up interest and late fees each month.

    This bank is supported by the Federal Reserve Board. When I attempted to file a complaint after almost five years of missing statements and united bank inc telling me and my lawyer some 8 months previously that they did NOT EXIST. I hung up with fed board investigator at 11:47am promising him I would have the complaint on his desk by next morning. At 5:49 that same night anyone want to guess what showed up in my email in box?? You got it every single statement. After nothing being said for over 8 months about the missing statements magically with no one asking them the bank suddenly decided to miraculously produce them.

    U tell me?? The fed investigator I spoke with said if they refused it was a 20 million dollar fine. The fed investigator said why would I care I wouldn’t be getting any of that money. I told him what about all the other people. He said that shouldn’t be my concern!!!’ I should concentrate on my own case. Oh I guess I forgot to mention a senior VP from United Bank Inc. Sits on the local board in Richmond!!!
    So if you think any if our elected officials or the employees at the fed whose salaries we pay is going to investigate wrongdoing on the part of these banks dream on.

    The only conclusion I can draw is fed investigator made a call to prevent an investigation into this bank.

  2. SickOfWellsFargo says:

    Where do I sign up for this lawsuit?

  3. Chere Jones says:

    Wells Fargo issued an insurance policy for Assurant through its subsidiary American Security Insurance Co. The premium is outrageous $1,000 every 6 months

  4. Kathleen says:

    Fargo has for the past 4 years extorted monies from me over and above the insurance I have with Lender placed insurance. I have sufficient insurance, but they keep placing it, increasing my payments then placing late charges on top. For 4 years I have been fighting them on this.

  5. Debra Pharr says:

    My house got broken into and Wells Fargo insurance only paid a third of what was taken! They gave me no value for priceless family heirlooms and jewelry that I had! The only thing they covered was a paltry third of what was stolen and fixed my doors! Big deal! They suck

  6. Tressa Harris says:

    I have a home mortgage with Wells Fargo for over 15 years.

  7. michelle smith says:

    I had an equally as interestinging situation with well fargo .We were under chapter 13 but still lost our Home.

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