Citibank Flood Insurance Lawsuit
- by Ayden
There is a new lawsuit claiming that the loan servicing companies Citibank and MidFirst Bank forcibly placed overly expensive flood insurance coverage on borrowers, and borrowers are now filing a lawsuit to get it changed. This lawsuit claims that the companies were negligent in informing borrowers of flood insurance requirements before the closing of their mortgage loans, and later demand additional flood insurance coverage to protect themselves. However, in most cases, these companies have been able to convince borrowers to accept the higher flood insurance premiums.
Casey alleges that the defendants force-placed excessive flood insurance on borrowers
In her lawsuit, Casey alleges that mortgage lenders violated federal regulations by forcing borrowers to take out more expensive flood insurance than necessary. In particular, she contends that defendants forced borrowers to pay higher insurance premiums than they otherwise would have paid. Moreover, she claims the lenders took kickbacks and commissions from these insurance companies and did not disclose these payments in their mortgage agreements. Her lawsuit highlights recent media reports and federal cases that address the same issue, as well as an investigation by the New York Department of Financial Services.
The District Court rejected the plaintiffs’ argument that the defendants acted in bad faith by forcing them to purchase excess flood insurance. In particular, the court found that the lenders had a fiduciary duty to make sure the borrowers were adequately insured and didn’t violate their contractual obligations by forcing them to purchase excess flood insurance. This finding has implications for the mortgage industry.
Defendants argue that mortgage agreements give them the discretion to set the amount of flood insurance required
In the case of Fez, the lender’s requirement that she insures her home against flooding was construed as a breach of contract and a breach of the implied covenant of good faith and fair dealing. The covenant, which requires mortgage lenders to ensure the home against certain hazards, is a key component of federal housing policy. In Fez’s case, Wells Fargo’s requirement to ensure Feaz’s home for the replacement value of her home was deemed unreasonable, and the District Court dismissed Feaz’s claims.
Defendants argue that the language of the hazard provision in mortgage agreements gives them the discretion to determine the minimum amount of flood insurance required, even if the mortgage agreement does not specifically state this. Further, the complaint fails to state a claim for breach of contract. The complaint is, therefore, dismissed without prejudice. This decision will have a significant impact on how mortgage agreements are interpreted.
A class-action lawsuit against Citibank Flood Insurance has been settled for $110 million. The lawsuit was filed by Gordon Casey, who was forced to pay 400% more for flood insurance than he originally needed. Over a decade, his premium increased from $325 to $1,478. He sued the bank on behalf of other homeowners who have also been impacted by excessive flood insurance charges. Ultimately, the lawsuit will resolve the underlying dispute.
A recent lawsuit filed against Citibank alleges that the bank forced many homeowners to purchase flood insurance they did not need. This is a violation of the homeowner’s mortgage contract, HUD requirements, and federal law. The bank also received kickbacks from the insurance companies they forced homeowners to purchase. The lawsuit is based on this illegal practice. If you have been forced to pay astronomical flood insurance premiums, you may have legal recourse.
Class-action lawsuit filed against Midland Mortgage
Gordon Casey, a disabled former factory worker from Syracuse, New York, filed a class-action lawsuit against Midland Mortgage in 2012. He alleges that Midland required him to purchase flood insurance coverage 14 times his outstanding principal balance. When his flood insurance lapsed, the lender forced him to purchase additional flood insurance and then passed along the cost to him in the form of higher monthly payments. The result was a devastating financial burden.
The settlement requires that the two banks make borrowers carry flood insurance for a minimum of three years. In addition, the bank must pay the attorneys’ fees and costs up to $230,000, or less than nine percent of the settlement value. This is the second large settlement for a mortgage lender against a homeowner based on flood insurance. Midland Mortgage is the largest lender in the U.S. and is headquartered in Oklahoma City.
Class-action lawsuit filed against Citigroup
A class-action lawsuit has been filed against Citigroup over its policies regarding flood insurance. The complaint says the bank force-placed insurance on its customers and profited from the extra insurance cost. While flood insurance may be required by law for certain mortgages, Citibank charges homeowners for those that are more than three times higher than the actual market value of their homes. Additionally, some homeowners claim their mortgage doesn’t require them to carry flood insurance.
In October, the Office of Comptroller of the Currency fined Citigroup, N.A., nearly $18 million for violations of the Flood Disaster Protection Act (FDPA). The bank was cited for failing to purchase flood insurance for its borrowers in special flood hazard areas. Further, the bank allowed a third-party servicer to extend the flood insurance holding period of a mortgage loan, causing borrowers to incur a late fee.
There is a new lawsuit claiming that the loan servicing companies Citibank and MidFirst Bank forcibly placed overly expensive flood insurance coverage on borrowers, and borrowers are now filing a lawsuit to get it changed. This lawsuit claims that the companies were negligent in informing borrowers of flood insurance requirements before the closing of their…
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