Bank of America Flood Insurance Lawsuit
- by Ayden
Sue Lass is a resident of the state of Pennsylvania who was forced by Bank of America to purchase flood insurance. The policy increased her mortgage payment by over 30%. Now, she carries insurance that costs almost $250,000, which is nine times the mortgage value. This story is part of a class-action lawsuit filed by attorney Kai Richter against Bank of America. Read the rest of this article to learn about how Sue Lass is fighting for fair compensation.
Bank of America
A recent court ruling revived several class action lawsuits against Bank of America for forcing home buyers to purchase flood insurance that cost more than the value of their mortgage. In two unrelated District of Massachusetts class actions, the U.S. Court of Appeals for the First Circuit vacated dismissals of claims against the bank in Lass v. Bank of America and Kolbe v. BAC Home Loan Servicing. However, it upheld the dismissals of claims against Bank of America’s insurance carrier, Balboa Insurance Co.
In addition, the plaintiffs in this lawsuit argued that the bank owed homeowners $31 million in overpriced flood insurance. BAC argued that the lawsuit was unconstitutional and unfair, as it pushed homeowners to buy overpriced flood insurance policies. While the court found in favor of the plaintiff, BAC asked the full court to review the case. The bank argues that the HUD regulations allow lenders to require more flood insurance than is necessary.
Force-placed flood insurance
A class-action lawsuit filed in California against Bank of America alleges that the company forced borrowers to buy flood insurance policies they didn’t need. The plaintiffs, based in San Jose, were forced by the bank to carry flood insurance equivalent to the balance of their mortgages. They were forced to purchase this insurance even though they did not want it and subsequently lost the policy. Bank of America has yet to comment on the lawsuit.
In the suit, Lass claims that the bank knowingly and intentionally imposed a flood insurance policy on her property without her consent. The bank then refunded her escrow account, which was used to purchase two lender-placed flood insurance policies. Although Lass believes that the forced-placed flood insurance policies are unnecessary, she has a strong case in her lawsuit. The force-placed insurance policies may not be necessary, duplicated, or even legal. In addition, they may be backdated to collect premiums. The bank may have agreements with insurance companies that provide reinsurance for properties insured by its subsidiaries. This may be considered illegal kickbacks.
Violation of TILA
The plaintiff asserts that the defendants violated TILA by forcing her to purchase flood insurance, which amounts to regulated “settlement services.” The bank and insurer dispute this claim by arguing that the forced placement was post-closing and that the homeowner had more than a year before the settlement. However, the plaintiff’s claim is based on factual and legal issues.
In addition, she claims that she received an insurance policy that exceeded the coverage she had contracted for. She also contends that the forced coverage constituted an impermissible change in terms. While the courts are divided on this question, the Travis case recognizes the principles of TILA and compels the bank to dismiss her lawsuit. However, this case will depend on the merits of the plaintiff’s claim.
In a recent lawsuit, a bank-ordered flood insurance policy was found to have been back-dated. While the insurance policy is effective, it is not always up to date and may not cover hurricane damage. For this reason, some consumers who use escrow accounts may become victims. They may miss payments to their insurance company and find themselves forced to buy a more expensive policy. ASIC has denied these claims.
In August 2009, BAC, a subsidiary of Bank of America, became the mortgage servicer for Kolbe’s mortgage. He was required to purchase flood insurance that exceeded the value of his mortgage. He subsequently sued BAC, alleging that he was forced to buy the insurance despite not being insured. The lawsuit alleges that BAC abused its flood insurance rights by purchasing back-dated policies and arranging kickbacks, qualified expense reimbursements, and other compensation for itself.
The plain meaning of mortgage terms
The plaintiff in a Bank of America flood insurance lawsuit alleges that the Defendants obligated him to purchase flood insurance and subsequently failed to do so. The lawsuit alleges violations of the Truth in Lending Act, Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, and the common law covenant of good faith and fair dealing. Defendants have moved to dismiss the Complaint.
In the plaintiff’s Flood Hazards Notice, the defendants required the insured to obtain flood insurance in an amount equivalent to the outstanding balance of the mortgage, estimated land costs, and maximum NFIP insurance. In contrast, the plaintiff argues that the Defendants’ demand to increase the insurance amounts constituted a false statement as to the extent of the Plaintiff’s obligations under the mortgage, and triggered disclosure requirements.
Class action suit
The attorneys for the plaintiffs filed a class action lawsuit against Bank of America for forcing consumers to purchase flood insurance. Bank of America allegedly used a scheme to require certain borrowers to buy flood insurance that was more than they needed, and they are now being compensated for their losses. The settlement amount is $31 million, and the class can claim any losses that were caused by this scheme. The settlement will require the bank to make significant changes to the way flood insurance policies are forced onto consumers.
The plaintiffs in the case allege that the bank illegally forced homeowners to purchase flood insurance policies at rates that were higher than required by the law. The bank, however, says that the mortgage contracts that were signed with the lenders permitted them to force consumers into purchasing high-priced flood insurance coverage. The plaintiffs believe that these practices violate federal law and are a violation of the contract. They have also sought damages for conversion and unjust enrichment.
Sue Lass is a resident of the state of Pennsylvania who was forced by Bank of America to purchase flood insurance. The policy increased her mortgage payment by over 30%. Now, she carries insurance that costs almost $250,000, which is nine times the mortgage value. This story is part of a class-action lawsuit filed by…
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