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Forced-Place Insurance Continues to Trigger Lawsuits

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Sacramento, CAThe parade of Lender insurance lawsuits continues unabated in spite of legislators in various states attempting to put checks and balances in place aimed at preventing allegedly unnecessary and unjust placement of expensive lender insurance products. One of the more recent class actions accuses US Bank NA of systematically abusing its right to force-place insurance on mortgaged property.

And it is its right to do so. Often lost in the conversation is the fact that any entity that holds a mortgage on property or real estate issues such a mortgage knowing that it is the owner’s responsibility to place adequate insurance on the property to ward against catastrophic loss. Were a homeowner to allow an insurance policy to lapse, or is seen as carrying insurance that proves to be inadequate when compared against the real or replacement value of the property, the mortgage holder has the authority to arbitrarily Force-Place insurance on the property, as needed.

The problem is that numerous banks have cozied up to insurance companies in a scheme that has seen homeowners with either more insurance than they need or lenders insurance that costs much more in premiums than more traditional forms of insurance. When this happens, Forced-placed Insurance Lawsuits often follow.

Plaintiffs in Barnard v. US Bank NA, No. 15-0008, filed January 8 of this year in the Southern District of Ohio, allege US Bank improperly purchased backdated, retroactive policies, charged borrowers for expired or partially expired coverage, and arranged for kickbacks for placing policies. Along with US Bank, defendants include Assurant Inc., Voyager Indemnity Insurance Co. and American Security Insurance Co.

Meanwhile, one defendant in another Force-placed insurance lawsuit attempted to have the lenders insurance lawsuit against them stayed because the co-defendant, Ocwen Loan Servicing LLC, had reached a settlement in principle in another forced-placed insurance class action (Lee v. Ocwen Loan Servicing, LLC, Assurant, Inc. and American Security Insurance Co., case No. 0:14-cv-60649-JAL (Lee), pending in US District Court for the Southern District of Florida.

“Because it appears that plaintiffs’ action will proceed in this Court regardless of whether the Lee settlement is ultimately approved - and because the only hardship proffered by moving defendants is the inconvenience of litigating two potentially duplicative actions the Court denies defendants’ request for a stay,” Judge Christina A. Snyder wrote in her January 6, 2015 order.

The Forced-place insurance lawsuit that will move forward as a result of the failed motion to stay is Shane Valdez, v. Saxon Mortgage Services, Inc. et al., Case No. 2:14-CV-03595-CAS(MANX), in the Central District of California.

READ ABOUT FORCE-PLACE INSURANCE LAWSUITS

Force-Place Insurance Legal Help

If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to an insurance lawyer who may evaluate your Force-Place Insurance claim at no cost or obligation.

READER COMMENTS

Posted by

on
Back in 2012, I had a mortgage ($2.5M) with a bank in South Florida that unfortunately was unable to make the payments for my own personal home insurance policy. The Bank purchased an $88,000 lender forced policy through an affiliate of the Bank. The home was in the legal proceedings of foreclosure but fortunately I was able to the sell the home and pay off the mortgage, the penalties, and default interest. The Bank refunded some of the bank placed policy but would never give an accounting and failed to repay the full balance of the premium. I have had to sue the Bank in small claims court for the small balance refund payable to me, but now considering suing them on the outrageous annual premium for the force placed lender policy. What do you suggest I do?

Thanks You

Posted by

on
Carol,
I don't know the cost of the Insurance (I'm guessing it is way to high) but as to why you have to carry it... you don't own the home that is why. Until you pay it off the bank has to protect its interest and that means requiring you to insure it just like if you have a car loan. Now they may be over pricing it and taking advantage but that is a different issue.

Posted by

on
CHZSE HAS PLACED A MORTGAGE INSURANCE OM OUR HOME AFTER WE FELL INTO FORECLOSURE THAT RUNS OUR PAYMENYS TOO HIGH. I'M RETIRED AND DISABLED AND HAVE NEVER MADE A INSURANCE CLAIM ON MY HOME. WHY DO I HAVE TO EVEN CARRY IT IF I DON'T WANT TOO?

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