The New York Department of Financial Services is investigating the force-placed insurance practices of several banks. A Citibank borrower testified in court that he was forced to purchase flood insurance at the lender’s request. The lawsuit focuses on the practices of the company’s mortgage bankers, and a recent settlement could result in millions of dollars in damages. But how will this affect the consumer?
Fannie Mae is the only “Lender” with discretion to set and change the amount of flood insurance
According to the NFIA, lenders must ensure all properties against floods of a certain amount. Under current law, lenders are required to ensure the amount of principal balance in a loan. If a borrower pays down the loan, however, the insurance obligation would be reduced. But this is not the case with Fannie Mae. The only lender with discretion to change the amount of insurance is Fannie Mae.
The amount of flood insurance a lender must insure is set by law and must be documented. However, the Flood Insurance Notification is not standardized. Lenders, including Fannie Mae, must document loans with standardized language and requirements. The only exception is if a loan has been refinanced. Fannie Mae also requires a lender to document a loan. It is important to understand what a lender does not do in a loan.
If you are considering purchasing a new home or renovating an existing one, you should take out flood insurance as soon as possible. It is extremely important to protect your home against flood damage, which is one of the biggest causes of bankruptcy. The bank cannot insist that a borrower purchase flood insurance that is more than the minimum requirement for mortgaged properties. The demand for flood insurance can only violate an implied covenant.
Bank of America
The settlement in the Citigroup Flood Insurance: Forced Placed Protection lawsuit against Bank of America provides prospective relief to victims of lender-placed insurance practices. Similar settlements were made with Wells Fargo & Co., HSBC Holdings Plc., and JPMorgan Chase & Co., but the settlement in the Bank of America case is unique. The attorneys for the plaintiffs are seeking up to $16 million in fees.
A homeowner from a flood-prone region in Texas filed a lawsuit against his bank, alleging that it forced him to purchase flood insurance in amounts that exceeded his legal limits. The bank disputed Mr. Yates’s claims that it was unresponsive to his calls. The bank’s representative, Mark Rodgers, denied Mr. Yates’ allegations. He stated that the home he bought in 2010 was a “special flood hazard area,” which meant that he was required to purchase flood insurance.
After the settlement was finalized, Bank of America will pay millions to class members. Citigroup agreed to reimburse these homeowners 12.5 percent of their premiums. However, the settlement isn’t enough to fully compensate consumers who were overcharged for flood insurance. As a result, consumers should consider taking action to recover more money and stop paying for insurance that they don’t need.
The lawsuit against Ocwen focuses on the company’s management of flood insurance payments. The company failed to provide the required information to borrowers and, in some instances, forcing borrowers into flood insurance policies with high deductibles. Additionally, Ocwen did not offer the borrowers critical liability or personal property coverage. The lawsuit alleges that these violations have damaged homeowners’ financial security. As a result, the company has agreed to settle with the plaintiffs and settle with the state.
The lawsuit was filed in 2010 and lasted for six years. It involved a $140 million settlement. The case is being tried in California, where the Court of Appeals ruled that Ocwen was responsible for the forcing of insurance premiums on homeowners. In the lawsuit, putative class members said that Ocwen’s resolution implies bias on the part of the class counsel. The company, however, has settled with the plaintiffs and agreed to reimburse the money lost.
In addition to paying a fine to the Federal Emergency Management Agency’s National Flood Insurance Program, Ocwen will pay $3 million in restitution to homeowners. It is also obligated to refund borrowers for the flood insurance premiums they were not required to pay. In addition, Ocwen must send out notifications to 4,000 borrowers and halt foreclosure proceedings in some cases. The company also says it will take steps to improve its customer service.