JPMorgan Chase & Co.
) agreed to settle a lawsuit that accused them of overcharging
homeowners for forced place insurances. The companies will be
paying an aggregate of $300 million to settle a class-action
lawsuit in Miami.
ASSURANT INC (AIZ): Free Stock Analysis
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
To read this article on Zacks.com click here.
The class-action lawsuit was filed in Jun 2012 on behalf of
homeowners who were compelled to take insurance policies as of
Jun 2008. Forced place insurance is generally ordered for those
homeowners who refuse to buy insurance themselves.
Though the mortgage agreement gives lenders the right to
force-place insurance, the plaintiffs accused JPMorgan of
providing high premium insurance coverage to homeowners to earn
additional commission. Through such an unlawful practice, both
JPMorgan and Assurant made profits worth approximately $1 billion
However, while settling the lawsuit, both JPMorgan and Assurant
neither accepted nor denied any of the allegations. Moreover, the
settlement still requires the consent of Chief Judge Federico
Under the settlement terms, JPMorgan and Assurant will pay 12.5%
cash reimbursements to those class members who paid premiums on
the forced place insurance and 12.5% credit to those who were
charged with premium but did not pay. The borrowers who have
already lost their homes are also eligible for compensation.
Further, JPMorgan will stop the collection of commissions related
to forced-place insurance policies.
While this is the first forced place insurance lawsuit to be
settled, other lawsuits with similar charges against banks
), Wells Fargo & Company and
Bank of America Corp.
) are pending in the Miami court.
The settlement of the lawsuit removes a legal headwind for
JPMorgan and Assurant, thus offering them some relief.
Notably, JPMorgan has been striving to eliminate the legal
hassles pertaining to the period prior to the financial crisis.
For Assurant, this is a second major lawsuit settlement this
year. Earlier in March, the company had agreed to a $14 million
fine to settle a probe over its business agreements with various
banks and other financial institutions.
Currently, both JPMorgan and Assurant carry a Zacks Rank #3