Homeowners who received a notice about force placed insurance coverage could have grounds to participate in a class action lawsuit investigation.

Homeowners who got a notice that their homeowners’ insurance policy had lapsed and that their lender was obtaining replacement insurance at the homeowner’s expense, might not realize that they could have grounds for legal action based on rules surrounding force placed insurance coverage.

Forced Placed Insurance Coverage

Many people are not familiar with what force placed insurance coverage means, so they might not realize that they have alternatives when getting a notice like this. Force placed insurance coverage is an official insurance policy placed by a mortgage servicer or a bank servicer when a homeowner’s individual property insurance has lapsed or when the bank determines that the individual property insurance or homeowner’s insurance is insufficient.

All mortgages require that borrowers have appropriate homeowners’ insurance on the property. Bborrowers who fail to maintain the minimum insurance due to a withdrawal by the existing insurer oversight or cancellation, might become subject to force placed insurance.

A force placed insurance class action lawsuit investigation has been launched for those people who were charged for insurance during the past five years. This industry wide practice of lenders and banks appearing to use force placed insurance coverage could lead to overcharges for homeowners.

Lawsuit Investigations

Multiple mortgage companies have been included in the force placed insurance coverage investigation, including Quicken Loans, Arrest Bank, Matrix Financial Corp, Provident Funding, Residential Mortgage or Shell Point Mortgage Servicing. Many consumers have come forward with concerns over force placed insurance coverage because of the high cost of the insurance the lender selected.

If you have a mortgage through any of the lenders that have been accused of engaging in force placed insurance coverage, previously received a notice that your homeowners’ insurance had lapsed, and if your lender obtained replacement coverage at your individual expense over the course of the last five years, or if you were charged for force placed insurance when you didn’t need it, you could be eligible to participate in a lawsuit investigation.

The practice of using forced place insurance coverage is not illegal on its own. However, charging premiums for force placed insurance policies or imposing force placed insurance coverage when it is not required could be against the best interests of the homeowner and could entitle these individuals to compensation through a class action lawsuit investigation.

Many people complained that they only learned about having a force placed insurance charge on their account after the lender had already added it, leading to confusion for the borrower.

The Consumer Financial Protection Bureau officially released new rules about lender placed insurance practices in 2013. The purpose of these new rules was to protect those consumers who allege that they had already been coping with excessive charges from unnecessary force placed insurance coverage.

If you or someone you know has already been impacted by this practice, you could have grounds to pursue compensation with the help of an attorney.