Two Forced-Place Insurance Suits Settled
Lawyers representing homeowners gouged on forced-placed insurance told a Miami federal judge Friday that three more class-action lawsuits have been settled.
Consumer attorney Aaron Podhurst of Podhurst Orseck announced additional settlements have been reached with Bank of America Corp., Citibank and HSBC. Details were not released, and the hearing continued after deadline.
The announcement came at a fairness hearing before Chief U.S. District Judge Federico Moreno in Miami, who was asked to approve a $330 million settlement with JPMorgan Chase & Co. The judge said he wouldn't decide Friday whether to approve the settlement. Another lawsuit against Citibank Inc. was settled in New York.
Objectors to the JPMorgan settlement were concerned that not enough homeowners would file claims to participate in the settlement. Podhurst disagreed, saying, "People are going to get more out of this than they would if they went to court."
Consumer lawsuits charged mortgage lenders that received no proof of homeowner insurance turned to insurance companies for policies that were as much as 10 times pricier than market rates. In exchange for the policy sales, the banks received hefty commissions from the insurers.
The Chase settlement includes $650 million in injunctive changes, giving consumers a total value of $1 billion, said Coral Gables attorney Adam Moskowitz, a partner at Kozyak Tropin & Throckmorton.
The settlement followed a separate one in March when Wells Fargo and QBE Insurance Group Ltd. agreed to a $19.3 million settlement to compensate about 30,000 South Florida mortgage holders.
Forced-place insurance became commonplace after the housing bubble burst in 2009. Florida had 31 percent of all forced-place charges in 2011, according to court records.
With forced-place policies coming under scrutiny, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac in November to barred reimbursement to mortgage servicers for expenses associated with captive reinsurance arrangements. The move was designed to suppress the kickback incentive of forced-place insurance.
Even with the settlements, Moskowitz said similar lawsuits against SunTrust Banks Inc., PNC Financial Services Inc. and Ocwen Financial Corp. have been assigned to other South Florida federal judges.