One of the major complaints among homeowners is being charged for coverage that they don’t need. The force-placed coverage was ordered after the homeowner disagreed with a Special Flood Hazard Area designation. M&T refused to issue a refund for the force-placed flood insurance. They are now pursuing a lawsuit against the company, asking for a refund. But will they be able to prevail?
Wells Fargo Bank
Plaintiffs in the IndyMac Flood Insurance: Forced-placed-coverage lawsuit against Wells Fargo Bank has challenged the practices of the bank in force-placing flood insurance on mortgage loans. The company forced the Plaintiffs to buy flood insurance from a third-party insurer, ASIC, while the actual value of the borrowers’ mortgages was $100,000 less. This is an unfair practice based on the lender’s duty of good faith and fair dealing, according to the complaint.
IndyMac filed this lawsuit after it discovered that Wells Fargo forced all borrowers to maintain flood insurance equal to the replacement cost value of their mortgages, which is often less than the outstanding balance on a loan. In addition, force-placed insurance policies can protect the lender’s interest in a property, but should not be imposed on borrowers who cannot afford it.
Assurant
The IndyMac Flood Insurance: Forced-placed coverage lawsuit alleges that several major banks forced homeowners into a flood insurance policy that was either worthless or unnecessary. The banks were compensated by collecting commissions on flood insurance purchases. The insurance costs were then tacked onto the mortgage balance, deducted from the homeowner’s home equity account, and expensed to the mortgage holder. The foreclosures caused by the forced-placed flood insurance policies have resulted in the homeowners being unable to pay their mortgage payments. These homeowners may have legal recourse against the mortgage company for the forced placement of coverage.
The plaintiffs’ lawsuit alleges that Wells Fargo, an insurance company backed by Assurant, pushed their customers into a flood insurance policy that was worthless. However, the insurance was purchased from a different insurance company, ASIC. Assurant’s legal team argues that the lawsuit is not properly filed and that plaintiffs have no standing to sue. Plaintiffs, however, counter Assurant’s arguments, asking for limited discovery to name the proper parties.
Federal National Mortgage Association (Fannie Mae)
In the federal lawsuit filed against Fannie Mae and Bank of America over the forced placement of flood insurance in New Mexico, the plaintiff claims that her mortgage loan contract exempts her from purchasing individual flood insurance. She contends that her house is covered by the homeowner association’s master policy. But her mortgage loan contract is not in the same league. Fannie Mae denied her request and is now suing her for restitution.
U.S. Bank is accused of forcing mortgage holders to purchase flood insurance for real estate in Special Flood Hazard Areas (SFHAs) that were not properly insured by the borrower. The bank purchased policies with backdated dates and arranged kickbacks and qualified expense reimbursements to make money. The lawsuit alleges that the bank and its insurer abused this power by paying kickbacks, purchasing backdated policies, and compensating itself for arranging these insurance coverages.
ASIA
The case is one of the largest-ever filed against a bank in the United States and involves two major players: Assurant and Wells Fargo. Wells Fargo forced its customers to purchase flood insurance through ASIC, while IndyMac purchased its flood insurance from another company. However, as the plaintiffs point out, the amount they owe Fannie Mae and Wells Fargo was lower than the amount they owed ASIC.
OneWest is a California-based bank, with offices in Kalamazoo and Austin. IndyMac is a division of OneWest and has its headquarters in Pasadena. The two companies are controlled by Assurant, a Delaware corporation with a principal office in New York. The two corporations are closely related in their operations, with ASIC serving as an indirect subsidiary. The lawsuit is ongoing and will continue until all of the parties agree to settle the matter.
Wells Fargo’s unauthorized efforts to obtain a kickback or to receive a benefit through the backdating
The case against Wells Fargo arose out of allegations that the company illegally backdated IndyMac Flood Insurance and charged borrowers a higher premium than necessary. The plaintiffs asserted that Wells Fargo placed the force-placed insurance charges on their loan balances without providing them with any services. It is unclear whether these changes were required by ASIC and why Wells Fargo positioned them that way.
In Wilmington, Ruiz met the Williams family, who had fled Corpus Christi, Texas, in 1970 after Hurricane Celia destroyed their home. Ruiz was also impressed by Wells Fargo’s CARE team, led by Steve Porter, who facilitated a wire transfer and deposited the money for the Williams family.
