A New York financial regulator is probing major banks and insurance companies on whether they overcharge customers on force-place insurance, for which the loan servicer commits to buying an insurance policy in the event of a homeowner failing to keep up their insurance premiums.
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New York State’s Department of Financial Services is investigating several large banks, including Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan (NYSE:JPM), and Wells Fargo (NYSE:WFC), on whether they have been overcharging for what has become an increasingly common practice.
The Office of Benjamin Lawsky, superintendent of the Department of Financial Services, is also said to be looking into whether policies being taken up by the investigated banks were issued by their own affiliates, though kickbacks between unrelated companies will also face scrutiny.
The potential conflict at Bank of America involving a unit called Balboa Insurance, which the bank owned until last year, will be the focus of the probe. JPMorgan’s small financial stake in an insurance company, Assurant, on behalf of its clients will also be scrutinized.
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