According to a Bloomberg report, Bank of America Corp. (BAC) and HSBC Holdings plc (HSBC) have resolved the force-placed insurance suits filed against them. The financial details of the respective settlements, however, have not been disclosed.
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, Citigroup Inc. (C) 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. (JPM) 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 losses.
Currently, BofA carries a Zacks Rank #3 (Hold) while HSBC has a Zacks Rank #4 (Sell).