Friday, July 27, 2012

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.


John said...

Of course, minor little detail that they don't want to address is that the customer has the ultimate control here because all they had to do to avoid this was keep their previous insurance in effect!

They BROKE the terms of their loan and now complain that it's somebody else's fault!

When will Americans quit belly aching and accept personal responsibility for their OWN ACTIONS?

John said...

" to see whether they fraudulently steered homeowners into overpriced insurance policies."

The aren't "steering" the customer anywhere. The customer stopped paying for the insurance which is required to protect the collateral and the BANK is excercising it's right to buy insurance in their place and bill the customer for the cost to the bank.

If the homeowner simply abides by their agreement to keep the property insured, this doesn't even happen!

Anonymous said...


Anonymous said...

AND wouldn't it have been nice if the Observer columnists had included that as part of the story to present the entire picture to readers who may not be aware....

Anonymous said...

BOA is hanging by threads..they have been digging their grave slowly. While they chose to pick a certain insurance co that I've never heard of I'm sure it was a back room deal. Think before you side with the bank. You could lose your job tomorrow.

Anonymous said...


Your argument is flawed, because built into every contract is an implied good faith and reasonable efforts clause. According to your logic, BOFA should be allowed to charge a million dollars for insurance since the homeowner missed his insurance payment. And that is why your argument is insane. Look up unconscionability in contracts you hack!