Recently, SunTrust, Midfirst and GMAC all announced settlements in their lawsuits concerning force-placed insurance. In the SunTrust Mortgage lawsuit (case number 0:13-cv-60749), plaintiffs alleged insurance premiums were inflated thanks to an agreement with QBE Specialty Insurance in which SunTrust allegedly received a kickback for placing QBE insurance on homes. The class reportedly involved more than 127,000 force-placed insurance policies over six years. As part of the settlement, SunTrust will reportedly return more than 10 percent of the premium from placing insurance policies.
Plaintiffs also alleged that the QBE policies were more than 15 times higher than previously used policies. They further alleged that they were not told how expensive the policies could be and that in some cases mortgage servicers retroactively place the insurance policy on a property to cover temporary lapses in coverage, even when no claims were made during that period.
“When the excessively priced insurance is force-placed on homeowners, already struggling to keep up with their mortgage payments, it often pushes those homeowners into foreclosure,” court documents state. The plaintiffs further note that the defendants have turned force-placed insurance policies into a “severely inflated profit-making machine.”
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Meanwhile, Midfirst Bank also settled a lawsuit regarding force-placed insurance. The settlement will see Midfirst pay $2.7 million to resolve allegations that customers were forced to buy unnecessary and excessive flood insurance on their properties. The settlement reportedly affects up to 15,000 class members.
GMAC also announced a settlement in its force-placed insurance lawsuit. That settlement, which awaits a judge’s approval, will see GMAC pay $6.25 million.