On July 11, 2012, Judge Michael Simon of the United States District Court for the District of Oregon issued a ruling that permitted the plaintiffs’ breach of contract claims to proceed in a nationwide class action alleging that Bank of America improperly force-placed high-premium flood insurance policies on homeowners across the United States.
In their complaint, plaintiffs Ronda and Larry Arnett allege that Bank of America has a practice of force-placing flood insurance coverage above the amounts required by borrowers’ mortgage contracts and by federal law. Bank of America asked the Court to dismiss the case, asserting that its mortgage contracts with borrowers permit it to force-place high premium flood insurance coverage in any amounts that it deems necessary. The Court denied Bank of America’s motion to dismiss and decided that Plaintiffs’ claims alleging breach of contract and conversion of funds should proceed to trial.
“When it comes to flood insurance, Bank of America and other companies in the mortgage servicing industry have engaged in a classic bait-and-switch, in which borrowers are informed of one set of flood insurance requirements at closing and then, later, Bank of America demands additional, unwarranted flood insurance coverage,” said Shannon Carson of Berger & Montague, P.C., one of the lead attorneys for the Plaintiffs. “Through this scheme, Bank of America has harmed tens of thousands of consumers by force-placing excessive and unnecessary flood insurance at extraordinarily high prices. Moreover, each time Bank of America force-places flood insurance policies on its borrowers it receives a kickback from the flood insurance companies with whom Bank of America has an exclusive relationship.”
A similar case, brought on behalf of Bank of America borrowers with home equity lines of credit (“HELOCs”), that also alleges abuses in the force-placement of flood insurance, has been brought by the same group of plaintiffs’ attorneys and is also pending before Judge Simon in the United States District Court for the District of Oregon.
The plaintiffs in this case, Arnett, et al. v. Bank of America, N.A., Civil Action No. 11-cv-1372 (D. Or.), are represented by the law firms of Berger & Montague, P.C., Taus Cebulash & Landau LLP, and Stoll Stoll Berne Lokting & Shlachter P.C.
I’ve had issues with bank of america in regards to force placed flood insurance as well. How does one get in a class action lawsuit on this? We added it on last year even though a neighbor in the same neighbor got it with Farmer’s insurance as well and it did not affect him. when we bought out house two appraisals in our hands show we were not in a flood zone and now we are? We’re in the desert area more prone to fire than rain.
We new that FEMA had put us in a flood zone (I guess everyone is now because they need to recoup monies for Katrina!) BUT, befor BOA could FORCE PLACE their expensive flood insurance, we bought it on our own. We are covered through Sept 2013. All of a sudden, this year we see our mortgage went up quite a bit! We questioned it and BOA is charging us fr flood insurance for NEXT year they claim!! We already paid nearly $400.00 on our own for it for this year! We are being double charged now!! My mortgage has gone up!! This HAS To be illegal! They tell us that the only way to get rid of the charge now is to pay our Escrow on our own separately!! My blood pressure nearly went through the roof when we stopped into BOA yesterday to discuss this.How can we stop this!!??Please help!!!