Nationstar told Truman Capital that it was the winning bidder for more than 500 loans, and then a few days later refused to complete the transaction. Image: ThinkStock

Consumer protection law firm Gilman Law LLP is building up a class-action federal lawsuit that targets homeowner’s hazard, flood or wind insurance placed by CitiMortgage, Citigroup, American Security and Assurant Inc.

But the firm’s goal is to expand allegations against other large banks.

The lawsuit (S.D. Florida, Case No. 1:12-CV-24378) alleges these banks “engaged in deceptive practices when force-placing insurance policies on borrowers, including violations of the Truth in Lending Act, RICO Act and other consumer protection laws.”

The force-placed insurance lawsuit currently proceeding in federal court echoes renewed scrutiny on the force-placed insurance market in an effort to help “homeowners victimized by questionable practices” implemented by their lender or mortgage servicer pursue restitution.

Besides CitiMortgage, Citigroup, American Security and Assurant, the firm said it is investigating “similar claims” by Bank of America, Wells Fargo, HSBC, Deutsche Bank, SunTrust and GMAC.

While imposing an insurance policy on the property when a homeowner allows a policy to lapse is legal, controversy surrounding the new terms of hazard, flood and wind insurance force-placed on a property in such instances is fueling a number of regulatory investigations alleging predatory practices imposed by lenders and services, including Gilman Law.

Such claims reiterate findings such as data reported by the New York Department of Financial Services, which showed that premiums of 15% or more collected by force-placed insurers “flow to the banks through insurance agents affiliated with the banks.”

Gilman is aggressively pursuing potential clients before their claims are barred from proceeding by state-based statute of limitations. It offers free legal evaluations to property owners who may be victims of predatory force-placed insurance practices.

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