Bank of America (NYSE:BAC) and HSBC Holdings (NYSE:HBC) have agreed to settle a slate of lawsuits stemming from a situation in which borrowers were forced to accept property insurance, according to what lawyers for the homeowners said at a federal court hearing in Miami, Bloomberg reports.
The lawyers did not divulge details on the terms of the settlements, but the news follows a $300 million agreement with JPMorgan Chase and a $110 million settlement with Citigroup on related issues. Bloomberg says that “force-placed insurance” is taken out for homes by the banks or mortgage providers when a homeowner’s policy expires or lapses, or the bank believes that the borrower doesn’t have enough coverage.
The homeowners said the banks got “a financial windfall” by negotiating deals with the insurance companies and then subsequently over-charging the borrowers for the coverage, Bloomberg reports.
The plaintiffs said Bank of America’s “force-placed insurance policies cost substantially more than comparable policies that could be purchased on the open market” in a complaint filed in 2012, per the news service. This was due to costs that included fees and commissions the insurer paid to the bank.
Both banks declined to comment on the matter to Bloomberg. A status report dated February 4 revealed that a settlement in principal had been established and is scheduled to be signed into a formal agreement within the coming weeks.
The recent news comes less than a month after Bank of America’s $8.5 billion mortgage settlement was given approval to move forward, and the bank continues to untangle the legal webs made during the financial crisis.