Bank of America Will Pay $228M in Forced-Insurance Accord
Bank of America Corp. agreed to pay $228 million to settle claims the bank overcharged for insurance homeowners were forced to accept when their regular policies lapsed.
The amount was disclosed in a document requesting approval for the accord filed yesterday in Miami federal court. Lawyers for homeowners told a federal judge in February that the Charlotte, North Carolina-based bank had agreed to a deal without providing further information.
Wells Fargo & Co. (WFC), HSBC Holdings Plc (HSBA), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) have also agreed to similar accords in cases alleging that banks got a financial windfall by cutting deals with insurance companies and over-charging borrowers for property coverage.
The deal is an “extraordinary settlement” that provides “prospective relief that would effectively end the lender-placed insurance practices at issue in this case,” lawyers for plaintiffs said in the Bank of America case.
Attorneys will seek as much as $16 million in fees, according to the filing.
As part of their settlements, JPMorgan will pay $300 million and Citigroup will pay $110 million. HSBC agreed to pay $32 million, according to a separate proposed settlement. The amount of Wells Fargo’s settlement hasn’t yet been specified.
Lawrence Grayson, a spokesman for Bank of America, declined to comment on the settlement’s amount.
The case is Hall v. Bank of America N.A., 1:12-cv-22700, U.S. District Court, Southern District of Florida (Miami).
To contact the reporters on this story: Susannah Nesmith in Miami at firstname.lastname@example.org; Christie Smythe in Brooklyn at email@example.com