Lawyers and Settlements; August 26, 2013
Encino, CA: A force-placed insurance lawsuit filed against Bank of America seeks class-action status. The lawsuit, filed in California in 2012 by Christopher Gustafson, alleges Bank of America provided force-placed insurance from its own affiliates at a high cost to the borrower while receiving fees, payments or commissions from force-placed insurance providers. Force-placed insurance lawsuits have been filed against a variety of banks alleging the banks engaged in abusive and unfair practices.
According to court documents (case number SACV-11-00915-JST-AN, United States District Court, Central District of California), Christopher Gustafson filed his lawsuit against Bank of America alleging “unlawful, abusive and unfair practices with respect to force-placed insurance…” The lawsuit notes that when borrowers do not maintain their hazard insurance policies, mortgage loan servicers replace those insurance policies with force-place policies, which are typically more expensive than the original policies but have less coverage. Finally, the mortgage loan servicer allegedly receives financial gain in the form of fees, payments or commissions for using the force-placed insurance.
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