A federal in New York judge has allowed a class action lawsuit against ""Citibank"":https://online.citibank.com/US/Welcome.c and ""MidFirst Bank"":https://www.midfirst.com/ over force-placed insurance practices to proceed, according to a release from lawfirms representing plaintiffs in the case.[IMAGE]
The plaintiffs are accusing Citibank and MidFirst Bank of maintaining a policy and practice of force-placing flood insurance above the amounts required by the borrowers' mortgage contracts and federal law.
According to the release, Citibank and MidFirst asked the court to dismiss the case, arguing the borrowers' mortgage contracts permit them to force-place high premium flood insurance coverage in amounts the banks view as necessary. The defendants' motions to dismiss the case were denied.[COLUMN_BREAK]
""Through this scheme, Citibank and MidFirst Bank have harmed thousands of borrowers by force-placing unnecessary flood insurance at extraordinarily high prices, which often results in unwarranted fees and other charges,"" said Shanon Carson of Berger & Montague, P.C., one of the lead attorneys for the plaintiffs, in a release. ""In addition, each time the banks require such insurance, they receive lucrative financial benefits from the insurance companies who place the flood insurance policies.""
In an emailed statement, a spokesperson with Citibank said, ""Contrary to the allegations which the Court was required to accept as true, we do not receive a commission for lender-placed flood insurance. We understand insurance issues can be complex, and we work with customers to try to resolve them.""
The spokesperson further stated, ""Federal law dictates that if a property is in a Special Flood Hazard Area, lenders are required to enforce the purchase of flood insurance for as long as the property remains in one of those flood zones. We abide by federal guidelines in allowing designated customers time to purchase their own flood insurance before we are required to purchase it on their behalf.""
""Berger & Montague"":http://www.bergermontague.com/, ""Nichols Kaster, LLP"":http://www.nka.com/, and ""Taus Cebulash & Landau, LLP"":http://www.tcllaw.com/ are pursuing class action lawsuits against other banks over force-placed hazard insurance and force-placed flood insurance practices. Other banks include Bank of America, Wells Fargo, JPMorgan Chase, Citizens Bank, and GMAC.