Bank of America Corp. and HSBC Holdings Plc agreed to settle lawsuits brought over property insurance that borrowers were forced to accept, lawyers for the homeowners said at a federal court hearing in Miami.
The lawyers told U.S. District Judge Federico Moreno today about the settlements without disclosing more details. The deals follow an earlier $300 million agreement with JPMorgan Chase & Co. and a $110 million settlement with Citigroup Inc. on the same issue.
So-called force-placed insurance is taken out on homes by banks or mortgage servicers when, for example, a homeowner’s policy lapses or the bank decides the borrower doesn’t have enough coverage. The homeowners alleged that the banks got a financial windfall by cutting deals with insurance companies and over-charging borrowers for the coverage.
Bank of America’s “force-placed insurance policies cost substantially more than comparable policies that could be purchased on the open market,” plaintiffs said in a complaint filed in July 2012. The excess cost included fees and commissions an insurer paid to the bank, they alleged.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the settlement announcement. Juanita Gutierrez, a spokeswoman for London-based HSBC in New York, said she couldn’t immediately comment.
In a status report filed to judge Feb. 4, the plaintiffs’ lawyers and lawyers for HSBC said those parties had reached a settlement in principal and planned to sign a formal agreement in the coming weeks. The lawyers didn’t give disclose details of the terms of the accord in the report.
The cases are Hall v. Bank of America N.A., 1:12-cv-22700, and Lopez v. HSBC Bank USA N.A., 13-cv-21104, U.S. District Court, Southern District of Florida (Miami).