A class action investigation has been launched into CitiFinancial Mortgage practices, with customers alleging the financial constitutions had been improperly charging California homeowners for force-placed insurance.

While force-placed insurance is not illegal, CitiFinancial Mortgage and other mortgage companies have been allegedly overcharging policyholders in exchange for kickbacks from insurance companies.

Citibank NA has recently agreed to settle class action lawsuits, alleging CitiMortgage, CitiFinancial Mortgage and Citibank had allegedly been forcing expensive force-placed insurance on homeowners.

According to the terms of the proposed settlement, $110 million has been suggested to settle the numerous class members claims that they had force-placed insurance imposed on them from CitiFinancial Mortgage and Citi business divisions.

The proposed Citibank class action settlement will resolve two class action lawsuits, alleging problems Citi’s force-placed insurance practices. The first is the Flood Settlement class consists homeowners who live in flood zones, but till faced high home hazard policies in their high risk environments.

The other is the Hazard Wind Settlement Class action consists of homeowners’, whose rights were allegedly violated by CitiFinancial Mortgage, Assurance Inc., and other financial institutions due to the expensive force-placed insurance policies.

Overview of Force-Placed Insurance

Force-placed insurance is enforced when homeowners can no longer afford the original mortgage agreement, which is often more expensive and covers less.

Homeowners are required to maintain home hazard insurance in the case of flood or other catastrophe, which may result in the house or property becoming damaged. This damage could diminish the value of the property for the mortgage company and homeowner, making homeowner’s insurance vital in protecting those assets.

However if the homeowner can no longer maintain their mortgage payments or if their mortgage plan becomes lapsed, then the mortgage company can implement force-placed insurance. Force-placed insurance, also known as lender-placed insurance, that is a home or flood insurance policy enforced by the lender or bank to protect the financial interest.

Even though force-placed insurance is not illegal, it is illegal for mortgage companies and other financial institutions to collaborate with insurance companies to increase the prices of force-placed insurance policies.

In exchange for allegedly raising the force-placed insurance rates, the insurance company shaves off a portion of the homeowner’s insurance premium for the banks’ “kickbacks.” This has allegedly resulted in financial abuse against customers, and even required banks from getting policies from competitors in some cases.

Some homeowners alleged the would have found a much cheaper deal for home hazard insurance on the open market than the force-placed insurance enforced by their bank. In addition, several homeowners were allegedly billed for force-placed insurance retroactively or before their current homeowner’s insurance policy lapsed.

Filing a CitiFinancial Mortgage Force-Placed Insurance Lawsuit

There have also been additional complaints indicating homeowners were also billed for force-placed insurance, even though they had active homeowner’s insurance policies. If a California homeowner with a loan from Citibank Mortgage or CitiFinancial Mortgage and allegedly experienced a force-placed insurance policy in the last two years may be eligible for file legal action.

Potential claimants should contact a specialized lawyer, to determine eligibility for a California force-placed insurance lawsuit.