Bank of America Settles Forced-Spot Insurance Claims for $228M

Financial institution of America Corp. agreed to spend $ 228 million to settle claims the financial institution overcharged for insurance home owners have been forced to accept when their standard policies lapsed.

The quantity was disclosed in a document requesting approval for the accord filed yesterday in Miami federal court. Attorneys for house owners told a federal judge in February that the Charlotte, North Carolina-based mostly financial institution had agreed to a deal without having supplying more info.

Wells Fargo & Co., HSBC Holdings Plc, JPMorgan Chase & Co. and Citigroup Inc. have also agreed to comparable accords in instances alleging that banking institutions acquired a financial windfall by cutting discounts with insurance coverage companies and more than-charging borrowers for residence coverage.

The deal is an “extraordinary settlement” that gives “prospective relief that would properly end the lender- placed insurance coverage practices at problem in this situation,” attorneys for plaintiffs explained in the Financial institution of America case.

Attorneys will seek out as significantly as $ sixteen million in costs, according to the filing.

As portion of their settlements, JPMorgan will pay $ 300 million and Citigroup will pay out $ 110 million. HSBC agreed to pay out $ 32 million, in accordance to a separate proposed settlement. The quantity of Wells Fargo’s settlement hasn’t but been specified.

Lawrence Grayson, a spokesman for Bank of America, declined to comment on the settlement’s amount.

The case is Hall v. Financial institution of America N.A., 1:twelve-cv-22700, U.S. District Court, Southern District of Florida (Miami).

Copyright 2014 Bloomberg.

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