CitiMortgage Insurance Charges on Redemptions Class Action

In Kansas and in certain other states, homeowners who lose their properties in a foreclosure proceeding may redeem, or buy back, the property within a certain period after the sale. During the time the bank or other lender owns the property, it is likely to take out hazard insurance on it. The hazard insurance may only be in force for a matter of months before the redemption. However, the complaint for this class action alleges that CitiMortgage, Inc. charges for a full year’s worth of hazard insurance, even though it may itself receive reimbursement for the unused portion.

The class for this action is all those who live in the US who redeemed a property that CitiMortgage bought in foreclosure and who, as part of that procedure, reimbursed CitiMortgage for property insurance premiums not prorated for the period of CitiMortgage’s ownership. There is also a Kansas Subclass for those who redeem property located in Kansas.

Angelia and Samuel Paschal lost their home to foreclosure in June 2013. Since they’d paid off less than a third of their mortgage loan, they were given the right to redeem it only in the following three months. They assigned this right to the plaintiff in this case, Keith Morton.

To redeem the property, Morton had to pay the sales price for the property plus the amount of certain costs incurred during the redemption period. These included such things as taxes and insurance premiums.

On the redemption payoff statement, Morton was billed the amount of $1,722 for hazard insurance. The complaint alleges that this was not the cost of the insurance for the period during which CitiMortgage owned the property but for a full year of the insurance. The complaint alleges this was an overpayment of $971.87. According to the complaint, CitiMortgage did not file any receipts or vouchers that reflected the higher amount.

Morton redeemed the property on September 14, 2015.

The complaint claims this is a regular practice: “CitiMortgage has charged individuals who redeem their homes after foreclosure sales for a full year of hazard insurance, even though just a small fraction of the insurance is typically used, and even though insurance companies will typically reimburse a purchaser for unused insurance.”

This practice, it says, is particularly egregious: “CitiMortgage is unjustly enriching itself and misleading persons who are at their most financially vulnerable—homeowners who just lost their homes in foreclosure proceedings and art trying to struggle back and recover their homes.”

The counts include unjust enrichment, fraudulent and negligent misrepresentation, and fraud by silence.

Article Type: Lawsuit
Topic: Real Estate

Most Recent Case Event

CitiMortgage Insurance Charges on Redemptions Complaint

November 6, 2020

In Kansas and in certain other states, homeowners who lose their properties in a foreclosure proceeding may redeem, or buy back, the property within a certain period after the sale. During the time the bank or other lender owns the property, it is likely to take out hazard insurance on it. The hazard insurance may only be in force for a matter of months before the redemption. However, the complaint for this class action alleges that CitiMortgage, Inc. charges for a full year’s worth of hazard insurance, even though it may itself receive reimbursement for the unused portion.

CitiMortgage Insurance Charges on Redemptions Complaint

Case Event History

CitiMortgage Insurance Charges on Redemptions Complaint

November 6, 2020

In Kansas and in certain other states, homeowners who lose their properties in a foreclosure proceeding may redeem, or buy back, the property within a certain period after the sale. During the time the bank or other lender owns the property, it is likely to take out hazard insurance on it. The hazard insurance may only be in force for a matter of months before the redemption. However, the complaint for this class action alleges that CitiMortgage, Inc. charges for a full year’s worth of hazard insurance, even though it may itself receive reimbursement for the unused portion.

CitiMortgage Insurance Charges on Redemptions Complaint
Tags: Foreclosure Redemption, Insurance, Unfair Charges, Your Bank