NEW YORK, May
9, 2012 (GlobeNewswire via COMTEX) -- The law firm of Kirby McInerney LLP
announced today that it is investigating potential class action claims against
Wells Fargo Home Mortgage in connection with a scheme to improperly inflate the
cost of force-placed hazard insurance.
To protect the
lenders' interest in secured property, mortgage loan contracts require the
borrower to maintain specified levels of hazard insurance. If the borrower's
coverage lapses, the lender is entitled to purchase coverage for the home,
"force place" it, and be reimbursed by the borrower for the cost.
Kirby McInerney
is investigating whether Wells Fargo has procured kickbacks from its
force-placed insurance providers in connection with the mortgage loans in its
servicing portfolios. It is believed that the premiums paid by Wells Fargo to
the providers are grossed up to include the dollar value of the kickbacks and,
furthermore, that Wells Fargo's demands to borrowers for reimbursement are
based on these inflated sums. The New York State Department of Financial
Services is conducting an investigation of improper practices relating to
force-placed insurance, including force-placed insurance charges that are
inflated by kickbacks. It has issued subpoenas to Wells Fargo in connection
with its investigation.
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