Class Action Says Bank of America Saddles At-Risk Borrowers with Fees for Unnecessary Property Inspections, Insurance

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A proposed class action alleges Bank of America has used a fee-maximizing automated servicing platform to fraudulently charge defaulted or at-risk-of-default mortgage borrowers for multiple and repetitive property inspections. 

The 71-page lawsuit against BoA and co-defendant Integon National Insurance Company alleges the property inspections are not required by lenders or permitted under lender guidelines, and in many cases unauthorized under state and federal regulations. According to the complaint, the Bank of America property inspections are designed to maximize fees assessed on the accounts of borrowers who have fallen behind on payments. 

The lawsuit also looks to recover fees allegedly charged to homeowners improperly by Bank of America for “unnecessary expenses and/or unprovided services” that the suit says are, in some instances, outright fraudulent and in all cases expensive, deceptive and otherwise unfair. Per the suit, these additional fees, such as force-placed flood insurance, are tacked on to the amount a borrower must pay to BoA to satisfy the lien on their property and otherwise avoid foreclosure. 

“The fees are intentionally disguised as being for necessary or otherwise reasonable expenses to deceive homeowners, in furtherance of a scheme to generate unnecessary and improper fees, and otherwise enrich BoA at the expense of homeowners,” the case alleges. 

Moreover, the complaint claims Bank of America, with the “willing assistance” of National General subsidiary Integon, force places insurance at unconscionably high, well-above-market rates while providing no added benefit to the insured.

According to the case, a borrower assessed an inspection fee must pay BoA an additional $17.50 on their mortgage in order to become current. If they fail to pay the amount, Bank of America imposes additional late fees, the suit says, arguing that this practice makes it more difficult for distressed borrowers to become current and leads others into foreclosure or loan modifications. 

Similarly, when BoA force places an “excessively-priced, unwarranted” hazard or flood insurance policy, the bank can also impose various fees in addition to the cost of the premiums while creating a negative credit reporting situation for the borrower, who may end up in foreclosure or seek a loan modification, the lawsuit says. 

The lawsuit looks to represent all persons in the United States or its territories who were charged one or more property inspection fees through Bank of America’s automated loan servicing platform when they inhabited the property to be inspected and BoA was aware and on notice the property was inhabited or were otherwise charged an inspection fee that was in violation of the applicable servicing guidelines. The case also looks to cover all persons in the United States or its territories who have or had a mortgage with Bank of America within the applicable statute of limitations period and were charged for a force-placed insurance policy procured through BoA or its affiliates, entities or subsidiaries. 

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