Homeowners sue BofA over force-placed insurance

A Florida couple is suing Bank of America Corp. over its force-placed insurance practices, saying the lender engaged in "exploitative and self-dealing practices" to the detriment of its borrowers.

Buying various forms of homeowners insurance for borrowers whose coverage has lapsed is standard "if done properly," mortgage customers John and Jacqueline Totura said in the lawsuit filed in federal court in Charlotte Friday. But the Charlotte bank manipulated the market by entering into an exclusive relationship with Balboa Insurance, a unit Bank of America owned until last year, the suit said.

Balboa paid a kickback from each force-placed policy to the bank, resulting in insurance that cost more than comparable policies purchased on the open market, the homeowners said. That "benefited both BAC and Balboa substantially at the expense of BAC consumers," argued the Toturas, who are asking for unspecified damages.

A bank spokesman on Friday declined to comment. The lawsuit is the latest in a string of force-placed insurance claims against big banks. Wells Fargo was accused in a lawsuit this month of charging inflated premiums for force-placed insurance, for instance.

And earlier this year, a New York state financial services agency said it was investigating several big banks, including Wells and Bank of America, to see whether they fraudulently steered homeowners into overpriced insurance policies.