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 The deal reached in Miami federal court is the latest of several
multi-million-dollar settlements reached over "force-placed"
insurance, which is coverage that lenders arrange to protect their
interest in a property when a homeowner's insurance has lapsed.
Mortgage agreements do allow lenders to charge homeowners for the
insurance, but lawsuits have accused banks of abusing that right by
passing on to homeowners the costs of kickbacks they received from
insurance providers.
Filed in 2012, the proposed class action against Bank of America and
QBE Insurance Corp accused them of violating state and federal laws,
including the U.S. Racketeer Influenced and Corrupt Organizations
Act (RICO.) QBE Insurance Corp is part of Australia-based QBE
Insurance Group Ltd. <QBE.AX>.
The settlement was disclosed in a motion for preliminary approval
filed by plaintiffs in the U.S. District Court for the Southern
District of Florida on Thursday. Plaintiffs also asked the court to
name law firms Kozyak Tropin & Throckmorton, Podhurst Orseck, and
Harke Clasby & Bushman as class counsel.
"Bank of America believes that its lender-placed hazard insurance
practices comply fully with state and federal law," bank spokesman
Richard Simon said. "Nevertheless, in order to put an end to this
litigation, we have reached a settlement that is acceptable to all
parties.
A spokesman for QBE could not immediately be reached for comment.
"We are thankful to the defendants who decided to settle this matter
to try and help their customers," Adam Moskowitz, a lawyer for the
plaintiffs said.
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The agreement is the latest of several reached between homeowners
and major banks since September over force-placed insurance. Other
settlements include $300 million with JPMorgan Chase <JPM.N>, $110
million with Citibank <C.N> and up to $32 million with HSBC Bank USA
<HSBA.L>.
Wells Fargo Bank <WFC.N> settled in March for an undisclosed sum.
The latest settlement covers Bank of America customers who were
charged for force-placed insurance between January 2008 and February
2014.
"Each class member stands to recover hundreds, if not thousands, of
dollars as a result of the settlement," lawyers for the plaintiffs
said in Thursday's filing.
The case is: Cheryl Hall et al v Bank of America N.A. et al, U.S.
District Court, Southern District of Florida, No 12-cv-22700
(Reporting by Dena Aubin in New York; editing by Kevin Drawbaugh and
Alden Bentley)
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