Predatory Practice Can Spike Homeowners’ Insurance Costs by as Much as 10 Times That of Voluntary Insurance
DALLAS (June 18, 2014) – The national law firm of Baron and Budd is now investigating potential lawsuits associated with the practice of force-placed insurance at certain bank and mortgage lenders. Recently, numerous national banks and mortgage providers, such as Bank of America, Wells Fargo, JP Morgan Chase and others, have reached settlements in lawsuits regarding force-placed insurance, a predatory financial practice where homeowners are forced to pay for expensive insurance policies, generally from an insurance company owned by the same bank holding the mortgage. This practice is costing Americans millions of dollars in inflated insurance policy payments every year.
Force-placed insurance, also known as creditor-placed, lender-placed or collateral protection insurance, can occur for several different reasons. It may happen after a homeowner has accidentally allowed his or her original policy to lapse. In other instances, it can occur when a homeowner does not purchase coverage for a particular hazard that takes place in their area, such as flooding or tornadoes.
However, the banking giants mentioned above are probably not the only lenders allegedly participating in this practice.
If you are a homeowner who has force-placed insurance from any of the following bank or mortgage companies, Baron and Budd may be able to assist you in filing a force-placed insurance lawsuit. The lenders currently under investigation include:
- Ally Financial
- American Home Mortgage Servicing
- Aurora Bank
- BB&T Mortgage
- Cenlar FSB
- Fifth Third Bank
- Flagstar Bank
- M&T Bank Corporation
- MetLife Home Loans
- OneWest Bank
- PHH Mortgage
The purpose of force-placed insurance, in theory, is to protect both the homeowner and the lien holder by guaranteeing the home remains insured. However, in 2011, the New York State Department of Financial Services (DFS) launched an investigation into the practice and found force-placed insurance premiums are up to 10 times higher than those charged to people who have voluntary insurance. At the same time, however, coverage can be substantially limited in many instances and often covers different risks.
“As you can see from these settlements, force-placed insurance is a very real issue, and the large banks are not the only perpetrators,” said Roland Tellis, a shareholder at the national law firm of Baron and Budd. “This practice only benefits the bank, not the homeowner, and it’s time for it to stop.”
If you think you have been affected by force-placed insurance, call 866-472-9108 or visit our website here to learn more: //baronandbudd.com/areas-of-practice/financial-fraud/force-placed-insurance/. As always, there is no cost for your call and all information is confidential.
ABOUT BARON AND BUDD
With a history of over 35 years Protecting What’s Right for individuals, communities, and governmental entities, Baron and Budd is a well-established law firm devoted to making a positive difference. With offices in Dallas, Austin, Los Angeles and Baton Rouge, Baron and Budd is able to take on complicated and expensive cases within the realms of dangerous drugs and medical devices, asbestos-related illnesses, consumer fraud, water contamination, the Gulf oil spill and fraudulent financial practices.