JP Morgan Forced Place Settlement May Open Floodgates

JP Morgan Forced Place Settlement May Open floodgates

Banking giant JP Morgan, along with an insurance company, paid out a $300 million settlement in September to settle accusations that they forced homeowners to buy insurance and in some cases inflated the policy prices via a kickback agreement.

The class action lawsuit involved 1.3 million homeowners who were forced to buy insurance when their policies either lapsed or where deemed insufficient.

Then JP Morgan forced homeowners to buy high priced insurance policies, and earned big kickbacks (“commissions”) on the policies – in some cases as much as 75% of the premium.  The premiums were added on to the monthly mortgage payments of struggling homeowners.

To JP Morgan, it seemed to be another ruthless business tactic to squeeze every dollar’s worth of profit from a housing calamity that they have been accused of creating. To millions of struggling homeowners, it was often the final nail in the foreclosure coffin.

What is shameful is that it appears JP Morgan and insurance company Assurant raked in around a billion dollars over forced place insurance policies since 2008. Assurant is an industry leader in issuing forced place insurance policies.

So, they made a profit of one billion dollars and paid a $300 million settlement. Does the phrase “Too big to fail” ring a bell here? JP Morgan admitted no wrongdoing. JP Morgan agreed to cease to accept commissions on future forced place policies.

Banks have been under increasing scrutiny from regulators over force-placed insurance, which is placed by a bank or other mortgage lender to protect their interests in a property if the homeowner’s insurance lapses.

Mortgage agreements give lenders the right to force-placed insurance, but regulators have accused banks and insurance companies of pushing up policy prices with improper commission and reinsurance agreements

The JP Morgan settlement may open the floodgates to many other complaints over forced place insurance.  Other class action lawsuits are pending in the same Miami U.S. District Court where the JP Morgan case was filed. Defendants read like a who’s who of banking giants: Citigroup, Bank of America, Wells Fargo and HSBC.

The JP Morgan settlement may funnel the consumer outrage over forced place insurance policies into the federal courts, and similar payouts may be expected as the legal landscape begins to shift.

A state-wide Florida lawsuit against Wells Fargo and QBE Insurance Corp (QBE.AX) was settled in May for about $19 million.

If you have a problem with a forced place insurance policy, or are facing foreclosure and want to keep your home, it is best to contact an attorney. There may be a statute of limitation issue involved, so it’s best to act quickly if there is a forced place insurance issue.

Only an attorney is capable of fully analyzing your situation as it relates to the law and representing your best interests in court.

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