Bank of America Force-Placed Unneeded Flood Insurance Class Action

When a lender provides a mortgage for a property, it has a right to insist that the borrowers maintain adequate insurance to protect its investment. The complaint for this class action alleges that Bank of America, NA (BoA), however, forces borrowers to take flood insurance that they do not need, and that the premiums of the insurance it force-places are inflated.

The class for this action is all persons with loans financed or serviced by Bank of America who, within the applicable statute of limitations, were charged for a force-placed insurance policy obtained because of BoA’s demands.

The plaintiffs in this case, Bradley and Cynthia Ice, bought their property in Oklahoma in June 2011 with a mortgage loan from BoA. At the time, they were not required to have flood insurance because the property was not located in a Special Flood Hazard Area (SFHA).

In June 2019, BoA sent the Ices a letter telling them that they were required to have flood insurance. A dispute ensued.

BoA’s representatives told the Ices that FEMA had revised the flood maps, putting their property within an SFHA. They were told that the premiums for the insurance would be just over $722 for the year.

As the dispute continued, the Ices spoke to a State Farm representative who told them their home was not in a flood zone but in a “Zone X,” where no flood insurance is required. The price he quoted them for flood insurance was $339 for the year. The Ices bought the insurance. They then sent proof that they had this insurance to BoA.

Despite this, BoA created an escrow account to use for the Ices’ flood insurance.

In August, the Ices obtained an elevation certificate from a land surveyor showing that they were in a Zone X and obtained a document from FEMA showing that their home was not in an SFHA.

BoA withdrew the flood insurance requirement, but in October 2019, it renewed its demand that the Ices obtain flood insurance.

The complaint alleges that BoA “requires borrowers to purchase flood insurance in excess of what is necessary to meet the requirements of federal law to protect its interest as a mortgagee and continues to insist on forcing payment for insurance that is unnecessary and overpriced.” Also, it says, “BoA’s affiliates charge excessively high insurance premiums above what an independent insurance company would charge,” in this case, double what State Farm charged.

According to the complaint, BoA “can readily extract monies from Plaintiffs and the class because of threats of negative credit ratings and foreclosure.” It uses its power in bad faith, the complaint alleges, to extract whatever amount it wants to from borrowers by taking the amounts it wants from borrowers’ escrow accounts or adding it on to the principal owed.

Article Type: Lawsuit
Topic: Loans

Most Recent Case Event

Bank of America Force-Placed Unneeded Flood Insurance Complaint

June 9, 2020

When a lender provides a mortgage for a property, it has a right to insist that the borrowers maintain adequate insurance to protect its investment. The complaint for this class action alleges that Bank of America, NA (BoA), however, forces borrowers to take flood insurance that they do not need, and that the premiums of the insurance it force-places are inflated.

Bank of America Force-Placed Unneeded Flood Insurance Complaint

Case Event History

Bank of America Force-Placed Unneeded Flood Insurance Complaint

June 9, 2020

When a lender provides a mortgage for a property, it has a right to insist that the borrowers maintain adequate insurance to protect its investment. The complaint for this class action alleges that Bank of America, NA (BoA), however, forces borrowers to take flood insurance that they do not need, and that the premiums of the insurance it force-places are inflated.

Bank of America Force-Placed Unneeded Flood Insurance Complaint
Tags: Forced Placed Insurance, Mortgage-Related Unfair Practices