HSBC, Wells Fargo Settle Forced Property Insurance Lawsuits
HSBC Holdings and Wells Fargo & Co. agreed to settle lawsuits by mortgage holders who alleged they were forced to pay for property insurance at inflated rates.
HSBC will pay as much as $32 million to resolve the claims, according to the proposed settlement agreement filed Feb. 28 in federal court in Miami. The Wells Fargo settlement agreement, filed yesterday in Miami, didn’t specify the total amount the lender may pay.
The deals follow an earlier $300 million agreement with JPMorgan Chase & Co. and a $110 million settlement with Citigroup Inc. on the same issue. Bank of America Corp. has also reached an agreement in principle to settle a class-action by lenders over the insurance, according to a Feb. 18 filing in Miami federal court.
Adam Moskowitz, a plaintiff's lawyer, said he didn't have a total dollar figure for the Wells Fargo settlement.
"We’re certainly excited to present the settlements to the court so we can communicate them to the class members," he said. "We think this is a very good settlement for homeowners nationwide."
So-called force-placed insurance is taken out on homes by banks or mortgage servicers when, for example, a homeowner’s policy lapses or the bank decides the borrower doesn't have enough coverage. The homeowners alleged in class-action lawsuits that the banks got a financial windfall by cutting deals with insurance companies and over-charging borrowers for the coverage.