According to a Bloomberg report,
Bank of America Corp.
HSBC Holdings plc
) have resolved the force-placed insurance suits filed against
them. The financial details of the respective settlements,
however, have not been disclosed.
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The settlements were revealed by the plaintiffs' lawyers in the
U.S. District Court, Southern District of Florida (Miami). The
formal agreement for the same will be signed in the near term.
The class-action lawsuit was filed in 2012 on behalf of
homeowners who were compelled to take insurance policies as of
Jun 2008. The plaintiffs alleged that both BofA and HSBC had made
substantial profit by signing deals with the insurer and
overcharging the homeowners for insurance coverage.
Forced place insurance is generally ordered for those homeowners
who refuse to buy insurance themselves or if their insurance
coverage is not adequate.
The aforesaid settlement is the latest deal between homeowners
and banks facing similar charges. Earlier this month,
) agreed to pay $110 million to settle the class-action lawsuit
in New York. The company was accused of overcharging thousands of
homeowners for forced place insurances.
Additionally, in 2012,
JPMorgan Chase & Co.
) and Assurant Inc. agreed to pay $300 million in aggregate to
settle similar charges. While settling the lawsuit, both JPMorgan
and Assurant neither accepted nor denied any of the allegations.
The settlement of the above-mentioned case removes a legal
headwind for BofA and HSBC, thereby some relief. Meanwhile,
regulators are striving to mete out justice to those who suffered
Currently, BofA carries a Zacks Rank #3 (Hold) while HSBC has a
Zacks Rank #4 (Sell).