HSBC, BofA Reach Forced-Insurance Accords, Lawyers SayChristie Smythe and Susannah Nesmith
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).