HSBC Force-Placed Insurance
HSBC Mortgage Corporation faces a lawsuit alleging abusive practices in its use of force-placed insurance. Plaintiffs in the lawsuit allege that premiums on force-placed insurance policies used by HSBC were unreasonably high and involved illegal kickbacks for unnecessarily placed policies. Several force-placed insurance lawsuits have been filed against HSBC and other mortgage lenders
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Force-placed insurance lawsuits allege illegal and unethical practices in the force-placed insurance industry. Among the allegations are that banks and mortgage lenders receive illegal kickbacks for force placing insurance. Furthermore, plaintiffs allege that because force-placed insurance is not available on a competitive market—homeowners have no say in which policy is used, the premiums are high. Making premiums even higher, they allege is that commissions are paid to banks and mortgage lenders from the insurer and those commissions are charged to the homeowner. Some critics argue that force-placed insurance policies can cost up to 10 times more than traditional insurance.
Plaintiffs also allege that despite premiums on force-placed insurance being much higher than regular homeowners' insurance, the policy often offers less protection for the homeowner. Furthermore, the force-placed insurance policy may cover more than the banks' actual interest in the home, further increasing the rates, and is sometimes applied retroactively. Finally, homeowners allege that when they have shown proof of insurance coverage, it has taken too long to have the force-placed insurance policy off their home.
HSBC Force-Placed Insurance Lawsuit
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