Gilman Law LLP is investigating allegations that windstorm coverage was force-placed on homeowners in excessive amounts.
Boston, MA (PRWEB) August 16, 2012
The national consumer protection lawyers at Gilman Law LLP are encouraged by recent news that several more states are considering launching investigations into the forced-placed insurance practices at large banks and mortgage lenders. According to a Bloomberg News article published on August 10, 2012, insurance regulators in several states, including Florida, Louisiana and Kentucky, have indicated they would look into the rates charged to homeowners, as well as business practices common in the force-placed insurance market. Gilman Law LLP is hopeful that these and other investigations will finally provide relief to the many thousands of overburdened homeowners who have suffered financially because of the way the force-placed insurance market has been allowed to operate. (http://www.businessweek.com/news/2012-08-10/u-dot-s-dot-regulators-to-examine-forced-place-insurance)
Gilman Law LLP has been actively investigating the way lenders force-place wind insurance policies with homeowners who have purportedly allowed their policies to lapse. Mortgage lenders that are parties to the pending multi-district litigation (MDL 2388) and also the focus of Gilman Law’s investigation include:
- JPMorgan Chase
- Wells Fargo
- Bank of America
According to Gilman Law LLP, a bank or mortgage servicer is legally entitled to force-place insurance on a homeowners’ property when the homeowner has failed to maintain insurance as required by the terms of the mortgage contract. Depending on the terms of a homeowners’ mortgage, lenders may be able to impose force-placed insurance for, among other things, wind insurance. Gilman Law LLP is investigating allegations that windstorm coverage was force-placed on homeowners in excessive amounts. Gilman Law LLP has also heard from homeowners who claim banks forced them to pay for backdated, duplicate or otherwise unnecessary wind insurance policies. It has been further alleged that banks are receiving kickbacks from insurance companies for purchasing force-placed insurance, including windstorm coverage. Some homeowners allege they have been forced into foreclosure because of these excessively expensive windstorm policies.
According to the New York Department of Financial Services*, two companies, Assurant, Inc. and QBE Insurance, control about 90% of the force-placed insurance market. Meanwhile, rates for force-placed insurance can be three times to as much as ten times the cost of normal homeowner's insurance, while offering less protection to the homeowner. The Department of Financial Services initial inquiry into the force-placed insurance market uncovered a number of questionable practices that raised serious “red flags and concerns,” including a lack of competition in the market; the fact that force-placed insurance has become both a major profit center for both banks and insurers; and “tight relationships between banks, their subsidiaries and insurers.” Early results of the State’s investigation indicated that high rates for force-placed insurance appear to be due in part to relationships between and payments by insurers to banks and their affiliates, including mortgage servicers and insurance agents and brokers. As much as 15 percent or more of premiums collected by force-placed insurers flow to the banks through insurance agents affiliated with the banks, the State said.
Testimony given during New York’s recent hearings** detailed kickbacks between banks and insurers consisting of fees, commissions, rebates, ceded reinsurance unaccompanied by any assumption of risk, and other considerations. For example, it was revealed that many banks have set up reinsurance subsidiaries who take over the risk from the insurance companies. Thus, the banks pay high premiums for coverage that is highly profitable, and then those profits revert right back to the bank through reinsurance agreements.
Some regulators have already acted to rein in the force-placed insurance market. For example, Fannie Mae, the owner of a substantial percentage of residential mortgage loans in the U.S., recently changed its policies for servicers of loans it holds and prohibited many of the questionable practices common in the force-placed insurance market. The National Mortgage Settlement*** recently reached between the five largest mortgage lenders, 49 state attorneys general, and the federal government also contained provisions prohibiting many of these practices.
The new scrutiny being placed on the force-placed insurance market may provide an opportunity for homeowners victimized by these questionable practices to pursue restitution from their lenders. If you believe your lender engaged in unfair practices when imposing a force-placed wind insurance policy on your property, it is vital that you retain legal help now. The consumer protection lawyers at Gilman Law LLP are offering free force-placed insurance lawsuit evaluations to homeowners nationwide. To discuss your legal options, please contact Gilman Law LLP by filling out our online form, or CALL TOLL FREE (888) 252-0048.
About Gilman Law LLP
Gilman Law LLP, a leading national law firm with offices in Florida and Massachusetts, has been recognized for delivering successful results to their clients across a broad range of claims stemming from consumer product injury, mass tort, and class action lawsuits. For over 32 years, the Gilman Law LLP team of highly experienced lawyers has earned renown for tireless work on behalf of their clients on many of today’s most challenging and important legal issues.
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