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A New Jersey couple has initiated a class action lawsuit against several companies including Bank of America and International Business Machines Corp (IBM), accusing the defendants of improper force placed insurance or hazard insurance practices.
Plaintiffs James and Barbara Bowles allege that Wilshire Credit Corp. (formerly owned by Bank of America) established an improper arrangement with affiliates of QBE Holdings, Inc., in which unlawful kickbacks were allegedly given at the customers’ expense.
According to the force placed insurance class action lawsuit, homeowners were charged for force placed hazard insurance. As part of the homeowners insurance scheme, Wilshire appointed a company, ZC Sterling, who purchased QBE homeowners insurance policies that included the complete mortgage loan.
For this, ZC Sterling was provided the rights to issue force placed insurance on any property for which homeowners insurance payments had lapsed or if the current hazard insurance was considered insufficient.
The Bowles claim that the kickbacks provided to the defendants caused inflated prices in hazard insurance policies, for which the homeowners were given no option to opt out of.
They are seeking to represent thousands in both a nationwide and New Jersey class for which any homeowners who were improperly charged for force placed hazard insurance through ZC Sterling (now known as QBE First Insurance Agency).
What is Force Placed Hazard Insurance?
When a homeowner’s hazard, flood or wind insurance policy lapses for any reason, banks, lenders or loan servicing companies often force the homeowner to purchase policies with substantially higher premiums. This is commonly referred to as force placed insurance.
These force-placed insurance policies, while not illegal, often provide unnecessary or duplicate coverage because they are backdated to collect premiums for periods of time when the homeowner has no risk of loss.
These actions are allegedly utilized by banks to increase their bottom line. Banks often establish arrangements with a force placed insurance provider that has agreed to share premiums with a subsidiary of the bank. These payments may represent unlawful kickbacks to the bank.
While forced placed or hazard insurance may seem justifiable, the controversy over the practice is called into question when the lender purchases force placed insurance to protect their asset, but at the expense of their customer.
Essentially, the force place hazard insurance policies the banks buy are usually more expensive than what homeowners would buy for themselves on the open market – sometimes 10 times as expensive, according to consumer advocates.
The banks and the companies that sell force-placed insurance say this is because they have to insure every house they’re presented with, rather than picking and choosing the least-risky ones.
If your bank force-placed an insurance policy on your home, your bank may have treated you unfairly. Your lender may have deceived you when it force placed homeowners insurance at an unreasonable or excessive rate and you may be eligible to join a class action lawsuit investigation and seek compensation for the improper charges you paid.
The Force Placed Insurance Class Action Lawsuit is Bowles et al., v. Wilshire Credit Corp., BAC Home Loans Servicing LP et al., Case No. 2:16-cv-00221, in the U.S. District Court for the District of New Jersey.
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.
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