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JPMorgan Chase Bank NA has agreed to pay $22.1 million to settle several class action lawsuits that accuse financial firm of force-placing expensive flood insurance on homeowners whose mortgages were serviced by the bank.
The plaintiffs filed a motion seeking preliminary approval of the class action settlement on Tuesday. “Class counsel have concluded that the settlement is fair, reasonable, adequate, and in the best interest of plaintiffs and settlement class members,” the motion says.
If approved, the class action settlement would resolve three separate class action lawsuits filed in New York and California in 2012, which accuse the bank of forcing homeowners with mortgages held by JPMorgan Chase to purchase more flood insurance than required by the federal government or by their actual lenders. In their class action lawsuits, the plaintiffs alleged that JPMorgan Chase required borrowers to carry excessive flood insurance coverage and that the bank unfairly profited from receiving commissions from the force-placed insurance policies. The plaintiffs argued that, in some cases, the force-placed insurance was as much as 10 times more costly than the coverage they would have been able to secure otherwise. They allege that JPMorgan Chase essentially got kickbacks from the insurance companies providing the policies, causing the bank to reap unfair profits.
The parties participated in alternative dispute resolution with an experienced mediator, during which time the parties “negotiated vigorously with each other and at arm’s length.” The three class action lawsuits were consolidated following the mediation.
Under the terms of the class action settlement, Class Members include all people in the United States “who were charged by JPMorgan Chase for lender-placed flood insurance (unless such charge was flat cancelled/refunded in full) in connection with a closed-end residential mortgage during the time period from January 1, 2007 to July 31, 2012, excluding Defendants, their affiliates, subsidiaries, agents, board members, directors, officers, and employees.”
The proposed force-placed insurance settlement provides for substantial injunctive relief. Under the terms of the class action settlement:
- JPMorgan will not require homeowners to carry flood insurance in excess of the federal minimum standard for three years
- JPMorgan will not accept any commissions from force-placed insurance for six years;
- For six years, JPMorgan will attempt to renew the borrower’s chosen flood insurance policy if the policy lapses; and
- JPMorgan will not seek to collect on any deficiency balance that exists on the date of the class action settlement’s final approval in the amount of any force-placed insurance premium.
The cash value of the class action settlement reflects approximately 74 percent of the commissions JPMorgan took in during the class period, which extends from the beginning of 2007 until July 2012. After court-approved fees are deducted, the remaining portion of the settlement fund will be distributed to plaintiffs on a pro rata basis in relation to their individual damages.
In September, JPMorgan Chase agreed to a separate $300 million class action settlement involving force-placed hazard insurance in Florida.
The plaintiffs are represented by Hagens Berman Sobol Shapiro LLP, Berger & Montague PC, and Taus Cebulash & Landau LLP, among others.
The JPMorgan Chase Force-Placed Insurance Class Action Lawsuit is Shelly Clements, et al. v. JPMorgan Chase Bank NA, et al., Case No. 3:12-cv-01279, in the U.S. District Court for the Northern District of California.
20 thoughts onJPMorgan to Settle $22M Force-Placed Insurance Class Action Lawsuit
Wells Fargo is currently engaging in the same practice. What law offices brought this suit against JP Morgan?
I took out line of credit in 2004 with chase. I did not used the money and will not use it at all. In 2009 Fema has designated my area as flood zone. Chase took out Fema insurance and want me to pay for 2009 to 2010 Meanwhile I have an active loan for my house with another bank which did not buy me insurance for my property. I bought by insurance in 2010 and I produced paper work to chase. Chase send me statement for 133.58 for insurance coverage. I called and went to the branch chase to resolve the issue I was told that it will be taken care. Today I found out chase took me to collection department and mess up my credit. I am going to remove everything I invest with chase. I give chase my money to handle what chase give me in return dishonesty.
I was with Chase for about eight years. They made me take out flood insurance also. I wonder if this lawsuit is the reason they transferred my loan. They should not be allowed to remain in business in my opinion. East Tennessee
I am wondering how I will know if or when I will receive anything form this settlement. I to was forced to take out flood insurance whenever chase took over our mortgage. Please keep me informed about this case and let me know if there is anything I need to do. How will this settlement be disbursed. The flood insurance made my payment go up 127.00 more each month which caused considerable hardship for me and my family.
Wow! My payments went up 300/month. Awful.
We have not been happy paying more money that Chase agreed upon. We have lived in our home for 15 years and all of a sudden we have to pay FLOOD INSURANCE?
If you live in a FEMA-designated flood zone, by federal law you must buy flood insurance if you have a mortgage. If you live in a FEMA-designated flood zone but do not have a mortgage, then you are not required to buy flood insurance.
My house is locate it in California desert where rarely rains and chase force me to get costly flood insurance. can you believe it .
FEMA forced you to do that via federal laws, not Chase. I agree it is way too expensive. And FEMA will do nothing if a flood occurs, if Hurricane Katrina is any indication.
In my California desert town where it rarely rains, a bunch of well-off people with very large, paid-for homes were not forced by law to buy flood insurance as they had no mortgage, so they did not. A big flood came, and completely wiped a lot of them out. They outsmarted themselves and lost everything.
they are crooks(chase) they don’t possess an honest bone anywhere.
As I have read the notice of settlement, I am assuming that I will not be participating in the settlement.
I therefor object to that settlement, which requires that I had a monetary loss to Chase. My loss was the harassment I experienced resulting from Chase’s actions for years, added to the cost of required flood insurance I was forced to buy elsewhere through the National Flood Insurance Program, That separate insurance was neither wanted or needed, in my opinion.
Most importantly, I was forced to buy insurance to cover the full limit of the homeowner’s insurance policy (up to $200,000), despite the fact that Chase was holding a second mortgage on the property (a HELOC) with an outstanding balance of roughly $50,000, The value for tax purposes was then about $85,000 for the land, with improvements adding $40,000 for the building.
This harassment was especially egregious because my loan was being paid down rapidly, faster than the minimum, and I have a near perfect credit record.
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I am in the same boat as you and wondered if I was the only one…how do we rectify this problem in illinois
My understanding of the settlement is that you will indeed be a participant if Chase charged you for the whole home’s value when Chase only had $50k exposure. If you got something in the mail about it then you will be a participant.
In my case I missed paying my private flood insurance for a year. It was normally around $1100. The next year I was able to buy a policy again, but Chase then charged me $2100 to cover the prior year that I had missed–$1000 more expensive–and totally unnecessary via lookback since there was no flood that year.
What worries me about all this is that only Chase’s commissions are being reduced (and by only 74% not 100%), whereas I think the price of the whole policy should be paid back, at least in my case. So, instead of the $2100 I think I ought to get back, I am expecting to get something like $8 per the settlement terms and after the Gross Settlement Fund gets whittled down to the Net Settlement Fund.
I also agree with you. 22Million is nothing compared to the 700000 or more people affected. You have no idea how much distress these outrageous requirements caused my family and I.
We are having the same problem with Chase Home finance. They put us in pre floreclosing bescause they said are escrow acount was short.. How is that I asked ??? Then I went through my statements and they charged us with Hazard Insurance of $ 5,865.00 I live in St. Louis, Mo is ther any help for me ? Please help
Hello, I have not lived in Florida but have had a home finaced by Chase and it seemed to me that at one point I was being charged a very high insurance cost.