The attorneys working with Class Action.org are investigating allegations that U.S. Bank unlawfully required borrowers to carry excessive amounts of flood insurance and received kickbacks in connection with this forced placed coverage. It has been alleged that U.S. Bank forced borrowers into maintaining flood coverage in amounts greater than what is required by law or their mortgage agreements, and in excess of the bank’s financial interest in the property. According to these claims, U.S. Bank unlawfully profited from force-placing this insurance by charging borrowers amounts in excess of net costs incurred by the financial institution and by arranging for commissions in connection with this lender-placed insurance. If you suspect you have been subjected to these practices by U.S. Bank or any other mortgage lender, the attorneys working with Class Action.org would like to hear from you. You may have legal recourse to seek compensation for monetary losses associated with this forced-placed insurance. For more information, please visit http://www.classaction.org/forced-placed-flood-insurance.html
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In a lawsuit filed in Minnesota against U.S. Bank, the plaintiff alleges that the bank violated his legal rights regarding forced placed, also known as lender-placed, insurance. The suit states that as of Nov. 15, 2009, his condominium association maintained more than a million dollars’ worth of flood coverage on the plaintiff’s building, amounting to $69,387.50 per unit. On Nov. 16, 2009, U.S. Bank sent the plaintiff a letter saying that federal law required him to maintain adequate flood insurance, and if it did not receive adequate coverage within 45 days, it would procure additional coverage for him and add the premium cost to his escrow account, according to the suit.
Shortly thereafter, the plaintiff received a notice informing him that U.S. Bank purchased a flood insurance policy from American Security Insurance Company for his property to cover the alleged “shortage” in coverage between the required flood coverage and his current policy, according to the complaint. The lawsuit claims that U.S. Bank and/or its affiliates received a kickback or commission on this forced-placed coverage
, and later alleges that the mortgage lender required even more coverage and purchased a second policy for the plaintiff’s property. According to the suit, the increased coverage was worthless, as his existing policy was already excessive in that the combined value of the condominium’s master policy and forced-placed policy exceeded his principal balance.
Typically, when a condominium complex is located in a Special Flood Hazard Area, the property and its units should already be insured against flood damage through the association. Therefore, when a lender forces the purchase of a second flood insurance policy, even though a condominium complex insurance flood policy already adequately covers the unit, the consumer is allegedly forced to pay for a second policy that is valueless to them. Under federal law, the National Flood Insurance Program (“NFIP”) will not pay twice for an insurable loss in a condominium complex, even if the particular loss is insured by both the complex’s policy and a policy covering individual units.
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