$3M Settlement Approved to Resolve BofA Homeowners Insurance Claims

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On Tuesday, a federal judge issued preliminary approval of a settlement to resolve proposed class action claims that Bank of America NA failed to properly release proceeds of insurance payments to homeowners.

The $3 million settlement was reached with homeowners who alleged that the homeowners were not given timely insurance payments to pay for property repairs. The Class Members claimed that this was in violation of mortgage agreements that required the banks to release the funds to homeowners for repairing property damage or to use to reduce outstanding mortgage payments.

The plaintiffs in the Bank of America class action lawsuit stated that their insurers wrote checks in the amount of approximately $20,000 to repair property damage caused by severe hail, but BofA refused to disburse the funds. Bank of America asserted that the company had met all of its contractual obligations to the homeowners and maintained that the homeowners had not suffered any damages.

Though a settlement was reached, BofA has continued to deny any wrongdoing, according to court documents outlining the terms of the settlement. Of the $3 million allocated in the Bank of America settlement, $1 million would be allocated to Class Members and the remaining $2 million would be used to cover the costs of notice and administration of the settlement Class.

The Bank of America class action lawsuit was filed in April 2013 which was about a month after the Department of Financial Services in New York openly criticized financial institutions for not releasing insurance proceeds to needy homeowners who were affected by Superstorm Sandy.

As a result, Freddie Mac and Fannie Mae responded by reducing restrictions on how banks and mortgage services can release funds to homeowners to accelerate the process, the DFS reported.

Husband and wife plaintiffs James and Cynthia Copher alleged that they provided all necessary information to Bank of America and followed up on their claim with dozens of phone calls, but after four years, the couple still has not received a check from their insurer, State Farm Fire & Casualty Co.

The lawsuit claimed that BofA promised to release $10,000 to the couple’s contractor for the initial repairs that were made to the house, with the bank promising to pay the remaining funds at a later date. However, the Cophers said that none of the payments materialized even after repeated requests from the homeowners.

Another set of plaintiffs, James and Rosamma Richard, told a similar story about not receiving funds from American Modern Home Insurance Co. for damage they sustained from baseball-sized hail that affected their home back in July 2011.

The homeowners insurance class action lawsuit was brought forth on behalf of borrowers who did not receive insurance claim payments from Bank of America or who did not have funds applied to reduce outstanding mortgage balances or to pay for home repairs. The lawsuit also included a subclass of Oklahoma property owners as well as a nationwide class.

The homeowners accused BofA of breaching mortgage agreements, conversion, and unjust enrichment. They sought award of damages, costs of litigation and injunctive relief to prohibit Bank of America from violations in the future and to set up a trust for the plaintiffs’ benefit.

In BofA’s response to the complaint in May 2013, the company said that the mortgage documents “speak for themselves” and they continue to deny any claims that it alleged were not consistent with the mortgage terms.

The final hearing for the Bank of America settlement is scheduled for June 2, 2016.

More information about the BofA class action lawsuit settlement was not immediately available. Keep checking TopClassActions.com or sign up for our free newsletter for the latest updates. You can also mark this article as a “Favorite” using your free Top Class Actions account to receive notifications when this article is updated.

Plaintiffs are represented by William B. Federman of Federman & Sherwood and Robert C. Finkel of Wolf Popper LLP.

The Bank of America Homeowners Insurance Class Action Lawsuit Settlement is James D. Copher et al. v. Bank of America NA et al., Case No. 5:13-cv-00353, in the U.S. District Court for the Western District of Oklahoma.