Mortgage Lenders “Force Place Insurance” on Homeowners
If you own your home, and your mortgage company "offered" to purchase homeowner's insurance for you, its possible that you have been a target of a sophisticated scam to profit unlawfully. "Forced placed insurance" could be a complex scheme in which banks "buy" homeowners insurance for homeowners at unreasonable rates, but gain valuable kickbacks for doing so. For example:
Capital One Bank NA exploited home mortgage customers by forcing them to upgrade their already adequate home insurance policies and pocketing more than $5 million through an illegal kickback scheme, a former customer alleges in a proposed class action filed Tuesday in Washington state.
Plaintiff George P. Klika claims Capital One mischaracterized the upgraded policies as necessary to protect its interest in homeowners properties when in reality the bank conspired with third party insurers to funnel money to the bank in violation of federal laws.
Essentially, bad-acting banks buy insurance from third parties at elevated rates, and then the insurance company kicks-back the premium to the bank. The bank, in turn, passes the extra cost to the homeowner who pays the premiums on the insurance the bank purchased for him.
Antonoplos & Associates is investigating claims of unreasonably high rates for home and auto insurance that was forced-placed by banks upon consumers. We are currently investigating the following banks for potential violations:
- M&T Bank
- Fifth Third
- Quicken Loans
- Loan Care
- Provident Funding
- Capital One
- Penny Mac
If you have obtained a home or auto loan from one of these lenders, and they have purchased insurance for you, you may have a claim.