Financial institution of America, QBE to settle insurance coverage lawsuit for $228 mln

April 7 Mon Apr 6, 2014 1:30pm EDT

April 6 (Reuters) – Financial institution of America and QBE Insurance Corp have agreed to pay $ 228 million to settle claims that they engaged in a kickback scheme inflating the price of insurance that property owners were forced to acquire, in accordance to a court filing.

The deal reached in Miami federal court is the most current of many multi-million-dollar settlements reached above “force-placed” insurance coverage, which is coverage that lenders arrange to safeguard their interest in a residence when a homeowner’;s insurance coverage has lapsed.

Home loan agreements do allow lenders to charge homeowners for the insurance coverage, but lawsuits have accused banking institutions of abusing that appropriate by passing on to property owners the costs of kickbacks they received from insurance coverage providers.

Filed in 2012, the proposed class action against Financial institution of America and QBE Insurance coverage Corp accused them of violating state and federal laws, like the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO.) QBE Insurance Corp is component of Australia-based mostly QBE Insurance coverage Group Ltd..

The settlement was disclosed in a movement for preliminary approval filed by plaintiffs in the U.S. District Court for the Southern District of Florida on Thursday. Plaintiffs also asked the court to identify law companies Kozyak Tropin & Throckmorton, Podhurst Orseck, and Harke Clasby & Bushman as class counsel.

“Bank of America believes that its loan company-placed hazard insurance practices comply totally with state and federal law,” bank spokesman Richard Simon mentioned. “However, in buy to put an end to this litigation, we have reached a settlement that is acceptable to all events.

A spokesman for QBE could not right away be reached for comment.

“We are thankful to the defendants who decided to settle this matter to attempt and assist their customers,” Adam Moskowitz, a attorney for the plaintiffs said.

The agreement is the newest of a number of reached in between property owners and significant banking institutions considering that September above force-placed insurance. Other settlements contain $ 300 million with JPMorgan Chase, $ 110 million with Citibank and up to $ 32 million with HSBC Bank USA.

Wells Fargo Bank settled in March for an undisclosed sum.

The newest settlement covers Financial institution of America customers who had been charged for force-positioned insurance among January 2008 and February 2014.

“Every single class member stands to recover hundreds, if not 1000’;s, of dollars as a end result of the settlement,” lawyers for the plaintiffs mentioned in Thursday’;s filing.

The situation is: Cheryl Hall et al v Bank of America N.A. et al, U.S. District Court, Southern District of Florida, No 12-cv-22700 (Reporting by Dena Aubin in New York Editing by Kevin Drawbaugh and Alden Bentley)

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