SEATTLE, May 3, 2012 (GlobeNewswire via COMTEX) -- Hagens Berman, a consumer-rights law firm, has filed a lawsuit on behalf of a proposed class of JPMorgan Chase ("Chase") borrowers nationwide whose home loans were serviced by Chase. The plaintiff alleges Chase illegally charged homeowners for inferior and often unnecessary flood insurance at premium rates nearly 10 times the market rate for similar policies.
The lawsuit was filed in the United States District Court for the Northern District of California on May 1, 2012, by Hagens Berman with co-counsel Peter Fredman. The lawsuit claims that Chase charges borrowers for flood insurance obtained from an affiliated brokerage entity in which Chase has a financial interest and from which Chase receives commissions, reinsurance kickbacks and other benefits.
Chase decides for itself whether flood insurance is required, even if prior loan servicers of the same loan did not require it, according to court documents. Chase sends requests that homeowners provide proof of insurance, and when that proof is not provided, it allegedly orders ("force-places") the coverage and charges it to borrowers' loan escrow accounts.
According to the complaint, the insurance coverage Chase orders may be inferior to typical flood insurance and has premium rates 10 times higher than the market rate for similar insurance, such as that available through the National Flood Insurance Program (NFIP).