HSBC, Wells Fargo Settle Force-Placed Insurance Claims

By and Susannah Nesmith | March 7, 2014

HSBC Holdings Plc 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 plaintiffs 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.

The cases are Hall v. Bank of America Corp., 12-22700, Lopez v. HSBC Bank USA NA, 13-21104, and Fladell v. Wells Fargo Bank N.A., 13-60721, U.S. District Court, Southern District of Florida (Miami).

–With assistance from Christie Smythe in Brooklyn. Editors: Peter Blumberg, Andrew Dunn

Latest Comments

  • June 24, 2015 at 11:02 am
    Victor J says:
    I am gonna take the lawsuit money and pay cash for a new house that I am going to build from the ground up and live with peace!!!
  • October 30, 2014 at 9:32 pm
    Cynthia LoMonaco says:
    Are you kidding me? I'm fighting to keep my car for this same ridiculous reason. Forced Placed Insurance. They want me to pay $700.00 per month for a 2007 Lexus due to the ins... read more
  • August 11, 2014 at 2:51 pm
    Eva Orr says:
    I received 5 letters and left several messages no return calls.
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