Banks COLLUDING With Insurers to RIP OFF Homeowners, Lawsuit Alleges

[Segami]

" A class action suit in Florida that moved forward this week highlights a little-appreciated aspect of the housing market--the cozy relationship between banks and insurance companies that often results in overpriced home insurance for already struggling borrowers. As the American Banker reported, http://www.opednews.com/populum/linkframe.php?linkid=146115 a federal judge in Miami on Tuesday opened the door to a class action against Wells Fargo. More than 20,000 Florida homeowners can now sue Wells Fargo and an insurance company, QBE, for allegedly overcharging for insurance. More than $50 million in insurance premiums are at issue, according to American Banker. The suit itself, filed last year, is sealed, but the judge, Robert Scola, laid out the allegations against Wells Fargo. The judge didn't rule on the case itself, but rather allowed it to go forward as a class action. In his decision, the judge cited the plaintiffs' claims that Wells Fargo and QBE “colluded in a scheme to artificially inflate the premiums charged to homeowners.”



The judge also said Wells Fargo has actually threatened to retaliate against homeowners who join the suit.



A spokesman for Wells Fargo said in an emailed statement that “the judge’s recent ruling only addresses the certification of the class in this case and not any of the underlying claims. We disagree with a number of the representations made by the plaintiffs’ attorneys.” The bank also disputed the judge’s claim that it threatened retaliation for the suit, saying “we made our argument in a purely procedural context in connection with the class certification motion. Wells Fargo has no intention of taking the actions referenced with regard to our customers.”



QBE did not respond to our requests for comment.



The case sheds light on the world of force-priced insurance, an industry that has grown in the years since the housing crisis. Among all the suits and scandals related to the crisis, troubles with force-placed insurance have flown largely under the radar. Here’s some background on the lawsuit and why there might be more of suits to come.


cont'



http://www.opednews.com/populum/linkframe.php?linkid=146115

[Hassin Bin Sober]

1. The article is a bit confusing (to me anyway) because the author ...

... uses the term "force priced" a couple times in what I assume is a typo.

Force placed is the term and you see it in finance contracts that require you to maintain an insurance policy on the item you took out a loan to purchase. In this case they are referring to homes and homowner's insurance. You also might run in to this with an auto loan.

In twenty years in the auto finance and home finance business, I've always told my customers to pay attention to anything that looks like an insurance solicitation. On a few occasions, these "solicitations" were actually notices the lender was force placing insurance. The customers tossed them in the garbage thinking they were junk mail pieces. In these cases, it was just a matter of a slip up documenting the policy. IIRC, in one case, my customer's condo association switched insurance carriers and didn't notify the lender (the new agent dropped the ball too).

I awlays tell my clients to avoid this situation at all cost because the premiums can be crippling.

Leave it to the mortgage banks to turn it in to a profit center..

Of note is the defendant's position that "if they paid their premium they wouldn't be in this mess"........... it's always easy to go after the low hanging fruit and gouge the fuck out of them.



I suspect someone will be along shortly to take up the bank's position on this issue.

[TreasonousBastard]

2. If you dig around, this is a common mistake...

in articles talking about his suit-- one article even uses both terms. I don't know where it started, but requiring homeowners to have insurance is common. It's not unusual for banks to arrange coverage if the home owner's coverage is canceled or not good enough.

Is this suit over excessive premium charges to people who dropped their coverage? That would make sense.

[Hassin Bin Sober]

3. Excessive premiums and kick-backs for doing nothing more than forking over a name to the ins. co.

Un-earned premium payments A.K.A. "kick-backs" are a big no no at least where real estate is concerned. The Real Estate Settlement Proceedures Act "RESPA" frowns on it.

[dixiegrrrrl]

4. In some cases the bank forced the insurance on people who had insurance already.

Bank of America has gotten into trouble about that. They charged the escrow accounts for insurance even tho the homeowner was already paying for their own coverage.

I do not have escrow account on my mortgage, for that reason.
Yet, BOA STILL tries to stick me with THEIR insurance every year when I pay my own insurance,
they send me a letter saying they do not have copies of my coverage.

My insurance agent says that in the "normal" way of doing things, the insurance company would notify the bank if insurance was dropped, otherwise the bank would assume the insurance was in place.
Bot Noooooooo..not any more....my agent has to call and fax and write every year to the bank to confirm I have insurance.
And he does it every year because I call and nag him until it is done.

[Hassin Bin Sober]

5. I noticed that about BofA in the last couple years.

They just send out the notices and trouble their customers to jump through hoops.

My neighbor is one. Every year she calls me with the same question. Our condo insurance carrier hasn't changed so their statement that they don't have the info on file is a flat out lie.

Sounds like the makings of a class action.

[dixiegrrrrl]

6. I do so hope anyone they forced insurance on WILL sue them.

[RB TexLa]

7. Doesn't your condo insurance change every year when it renews into another policy?

How is your bank supposed to know it's renewed or that you haven't changed insurance? And when the investors audit them are they supposed to say that the proof is that you've always had insurance? That's true of everyone until they don't have insurance.

[Hassin Bin Sober]

8. How is your bank supposed to know?

You tell me. Probably like it's always done - the insurance co. sends the renewal to the mtg. company listed as the loss payee.

I've been in the mortgage business 12 years and owned a condo longer than that.

This is a recent problem and, As far as I know, only with Bof A (from my personal experience and customer complaints) for the last couple years.

I suspect BofA has decided to "throw shit against the wall and see what sticks" cutomer convenience and satisfaction be damned.