Consumers who were forced by their mortgage lenders into paying for an excessive homeowners insurance policy.
M&T Bank, Fifth Third, Dovenmuhle, Provident Funding, Flagstar and Capital One
When a consumer allows their homeowners' or property insurance to lapse, their lender is permitted to purchase or "force place" insurance on their behalf. It has been alleged, however, that certain mortgage lenders are taking advantage of this authority, force placing overpriced, excessive and even unnecessary coverage for their own financial gain.
It has been alleged that a number of lenders have unfairly and deceptively charged homeowners for this coverage, which in some instances was not necessary or exceeded what was required under the terms of their mortgage agreement. The cost of force placed homeowners insurance can reportedly be up to ten times as much as the coverage the borrower could have bought on their own, and lenders are allegedly receiving kickbacks from the insurance companies for purchasing these policies.
Force Placed Insurance Lawsuits: Property Insurance
A number of financial establishments are among the financial establishments which have been hit with force placed insurance lawsuits from borrowers who were forced to pay for allegedly excessive homeowners insurance. Force placed homeowners insurance lawsuits are making a number of similar claims, including that the lenders are force placing insurance even though the company was aware that the property had adequate coverage. In some cases, mortgage lenders are backdating policies providing coverage retroactively or otherwise forcing consumers to pay for insurance policies which were not necessary, according to the force placed hazard insurance lawsuits. It has also been alleged that the lenders are receiving kickbacks, disguised as cost reimbursements.
Force Placed Insurance Class Action
Federal law requires that force placed insurance bona fide and reasonable, but recent force placed insurance lawsuits suggest otherwise. While it is legal for lenders toforce place insurancewhen coverage has lapsed, they are not permitted to take advantage of their ability to purchase insurance on their borrower’s behalf. Force placed insurance can reportedly cost up to twice the amount as borrower-purchased coverage, while providing minimal benefit; in some cases, these extreme costs have reportedly forced homeowners into foreclosure.