Bloomberg News

Bank of America Will Pay $228 Million in Insurance Accord (1)

April 04, 2014

Bank of America Corp. (BAC:US) agreed to pay $228 million to settle claims the bank overcharged for insurance homeowners were forced to accept when their regular policies lapsed.

The amount was disclosed in a document requesting approval for the accord filed yesterday in Miami federal court. Lawyers for homeowners told a federal judge in February that the Charlotte, North Carolina-based bank had agreed to a deal without providing further information.

Wells Fargo & Co. (WFC:US), HSBC Holdings Plc (HSBA), JPMorgan Chase & Co. (JPM:US) and Citigroup Inc. (C:US) have also agreed to similar accords in cases alleging that banks got a financial windfall by cutting deals with insurance companies and over-charging borrowers for property coverage.

The deal is an “extraordinary settlement” that provides “prospective relief that would effectively end the lender-placed insurance practices at issue in this case,” lawyers for plaintiffs said in the Bank of America case.

Attorneys will seek as much as $16 million in fees, according to the filing.

As part of their settlements, JPMorgan will pay $300 million and Citigroup will pay $110 million. HSBC agreed to pay $32 million, according to a separate proposed settlement. The amount of Wells Fargo’s settlement hasn’t yet been specified.

Lawrence Grayson, a spokesman for Bank of America, declined to comment on the settlement’s amount.

The case is Hall v. Bank of America N.A., 1:12-cv-22700, U.S. District Court, Southern District of Florida (Miami).

To contact the reporters on this story: Susannah Nesmith in Miami at susannahnesmith@gmail.com; Christie Smythe in Brooklyn at csmythe1@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Mary Romano, Andrew Dunn


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Companies Mentioned

  • BAC
    (Bank of America Corp)
    • $18.02 USD
    • 0.04
    • 0.21%
  • WFC
    (Wells Fargo & Co)
    • $55.35 USD
    • 0.01
    • 0.02%
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