Friday, March 30, 2012

JPMorgan Still Faces Suit on Force-Placed Coverage

SAN FRANCISCO (CN) - Former customers of JPMorgan Chase can pursue a class action challenging overpriced, "force-placed" hazard insurance policies that the banking giant forced on certain borrowers, a federal judge ruled.
The ability to force-place hazard insurance is a typical clause in most mortgage loan contracts, as it is considered a method of protecting the lender's interest in the secured property.
However, the plaintiffs charge that Chase purchases force-placed insurance (FPI) "from insurers that provide a financial benefit to defendants and/or their affiliates and at rates that far exceed borrower-purchased hazard insurance (while providing substantially less coverage)."
Lead plaintiffs Patricia McNearny-Calloway, Colin MacKinnon, Terrie MacKinnon, Andrea North and Sheila Mayko also allege that Chase backdates the FPI policies to collect premiums for periods that have already passed and duplicates coverage by purchasing FPI policies immediately following the termination of the homeowners' coverage, even though the bank is temporarily protected under Lender's Loss Payable Endorsement language under homeowner policies.
McNearny-Calloway claims that after her husband died and financial difficulties forced her to stop paying the $1,640 annual premium for hazard insurance in August 2009, JPMorgan Chase purchased a policy in January 2010, backdated to August, with an annual premium of $4,233 and charged the policy to her escrow account. Chase's policy provided less coverage than her own policy, according to the plaintiff.
The bank then automatically renewed McNearny-Calloway's policy at the same rate on August 26, 2010. She purchased her own policy, for $1,103 on September 1. Chase cancelled its FPI policy, "but charged her escrow account for retroactive coverage for the period extending from August 26, 2010 to September 1, 2010," according to the complaint.

Read the complaint. Click here.

No comments: