By: Louise Kennedy These days, more of us than ever are realizing how events can take a sudden turn and present us with a financialread More
News, Class Actions, Commercial Litigation
Forced-Placed Insurance by Mortgage Banks and Servicers Under Investigation
Seeger Weiss is investigating claims for class action suits against various mortgage banks and mortgage servicers for requiring current and former borrowers of mortgage loans and home equity loans to purchase forced placed insurance in excess of federal requirements.
Federal law mandates that when a customer borrows a home equity or mortgage loan, the borrower must have adequate flood insurance if their home is located in a “Special Flood Hazard Area.” Before closing, mortgage banks typically send their customers notices informing them that they need to purchase the insurance. If the customer does not respond, the banks purchase the insurance policy at a high premium and assesse the premium costs on the homeowner. In the end, customers have no choice but to pay the premiums.
A string of class action lawsuits have been filed against some of the largest banks and mortgage servicers in the U.S. The lawsuits allege that consumers are charged excessive and unreasonable premiums for their force-placed insurance. Indeed, force-placed insurance can cost up to 10 times more than traditional homeowners insurance, often with inferior coverage. Furthermore, the suits allege that banks set up their own specialty insurance affiliate companies, which could lead to conflicts of interest. Accordingly, it has been reported that up to 31 financial institutions have been subpoenaed by the New York State Department of Financial Services for an investigation into the overlap between banking and insurance.
If you obtained a mortgage from any bank or mortgage servicer and were forced to buy flood insurance even though you may have been covered by an adequate flood insurance policy, please contact us to discuss your claim. You may be entitled to relief. All initial consultations are free of charge.
With experienced attorneys and locations throughout the United States, our firm strives to provide the highest quality of service to our clients. We treat each case with careful attention to ensure that consumers get the justice they deserve. Seeger Weiss has office locations in New York, New Jersey, and Pennsylvania.