Fidelity Bank Insurance Charges on Redemptions Class Action

In certain 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 the Fidelity Bank, NA 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 Fidelity bought in foreclosure and who, as part of that procedure, reimbursed Fidelity for property insurance premiums not prorated for the period of Fidelity’s ownership. There is also a Kansas Subclass for those who redeem property located in Kansas.

In certain states, homeowners who lose their properties in a foreclosure proceeding are permitted to redeem, or buy back, the property within a certain period after the sale. In Kansas, the period during which the former homeowners may redeem the property varies according to the amount of the mortgage balance remaining. If the former homeowner has paid off less than a third of the mortgage loan, the period is three months; if the homeowner has paid off more than a third, the period is twelve months.

To redeem a property, a person must pay the sales price for the property plus the amount of certain costs incurred during the redemption period. These include such things as taxes and insurance premiums. Hazard insurance is one of the items the former homeowners must pay.

If the property is redeemed in less than a year, the insurer is likely to agree to reimburse the bank for the unused portion of the insurance. But according to the complaint, Fidelity dos not charge the prorated cost.

The complaint puts the allegation this way: “Fidelity 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.”

It claims that this practice is particularly egregious: “Fidelity 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.”

According to the complaint, the amounts involved are not small. While the price of hazard insurance varies, depending on the value of the property and other considerations, the complaint estimates the price to be between a little less than a thousand dollars and thousands of dollars.

Article Type: Lawsuit
Topic: Real Estate

Most Recent Case Event

Fidelity Bank Insurance Charges on Redemptions Complaint

November 6, 2020

In certain 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 the Fidelity Bank, NA charges for a full year’s worth of hazard insurance, even though it may itself receive reimbursement for the unused portion.

Fidelity Bank Insurance Charges on Redemptions Complaint

Case Event History

Fidelity Bank Insurance Charges on Redemptions Complaint

November 6, 2020

In certain 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 the Fidelity Bank, NA charges for a full year’s worth of hazard insurance, even though it may itself receive reimbursement for the unused portion.

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