Bank accused of charging its mortgage clients inflated homeowners coverage premiums.
A lawsuit has been filed against Wells Fargo Bank NA, which has accused the company of charging inflated force placed insurance premiums to homeowners who had allowed their coverage to lapse.
The complaint stated that the inflated premiums are designed to cover kickbacks.
The Fort Lauderdale, Florida federal court received the filing, in which homeowner Ira Fladell stated that “The premiums are inflated to cover kickbacks in the form of unearned commissions and bundled administrative costs not properly charged to the consumer.”
Fladell says that the bank is guilty of a breach of its own contract with him, and that it has behaved in bad faith. He is now seeking an unspecified amount of money damages. Fladell also pointed out that Wells Fargo purchased additional flood coverage as a part of the force placed insurance while the existing policy was still in effect.
This Florida homeowner is a lawyer, and is hoping to achieve class-action status on behalf of all of the other mortgage customers in the state who have found themselves in the same position.
This is only the latest in a number of force placed insurance suits popping up all over the country.
In fact, the filing that was made by Fladell occurred on the same day that a U.S. judge in an Oregon court released a ruling in another class action lawsuit about force placed insurance. In this case, it was a suit against the Bank of America Corp. It has now allowed the case to move forward on two of the seven claims that were made.
Fladel’s state leads the country in of force placed insurance premiums. In fact, Florida took in 35 percent – that is, $1.2 billion – of the country’s share of premiums from these policies. This was over triple the amount that had been sold in the second place state, California, which has a much larger number of homeowners.
This is the direct result of the fact that Florida is among the states in the country with the highest number of foreclosures. When homeowners default on their mortgage payments, they also typically cease to make their premium payments, causing force placed insurance to kick in.