SEATTLE, May 3, 2012 (GLOBE NEWSWIRE) -- Hagens Berman, a consumer-rights law firm, has filed a lawsuit on behalf of a proposed class of JPMorgan Chase (NYSE:JPM) ("Chase") borrowers nationwide whose home loans were serviced by Chase. The plaintiff alleges Chase illegally charged homeowners for inferior and often unnecessary flood insurance at premium rates nearly 10 times the market rate for similar policies.
The lawsuit was filed in the United States District Court for the Northern District of California on May 1, 2012, by Hagens Berman with co-counsel Peter Fredman. The lawsuit claims that Chase charges borrowers for flood insurance obtained from an affiliated brokerage entity in which Chase has a financial interest and from which Chase receives commissions, reinsurance kickbacks and other benefits.
Chase decides for itself whether flood insurance is required, even if prior loan servicers of the same loan did not require it, according to court documents. Chase sends requests that homeowners provide proof of insurance, and when that proof is not provided, it allegedly orders ("force-places") the coverage and charges it to borrowers' loan escrow accounts.
According to the complaint, the insurance coverage Chase orders may be inferior to typical flood insurance and has premium rates 10 times higher than the market rate for similar insurance, such as that available through the National Flood Insurance Program (NFIP).
"We contend this is a poorly disguised scam that uses federal flood insurance requirements to benefit Chase at the expense of homeowners," said Steve Berman, managing partner for Hagens Berman. "We believe that Chase purposefully chooses substandard coverage at exorbitant rates in order to get commissions and kickbacks, and then it passes the inflated charges on to its customers."
"They are simply not acting in good faith under the contractual deeds of trust. They are taking advantage of their own customers, plain and simple," he added.
The plaintiff in the case, Shelly Clements of Richmond, Calif., alleges that she purchased a condominium in 1999, but was not required to purchase flood insurance. She asserts that she refinanced in 2005, and again, was not asked to purchase flood insurance.
However, following the collapse of Washington Mutual in 2009, Chase allegedly took ownership of Ms. Clements' mortgage and a year later asked that she provide proof of flood insurance. A month later, she alleges Chase sent her a letter notifying her that insurance had been placed on her property for which she was financially responsible.
Hagens Berman urges homeowners who have had forced-placed flood or hazard insurance charged to their mortgage account by any lender to contact the firm. You can reach Hagens Berman by calling (206) 623-7292 or by emailing Force-placedInsurance@HBSSlaw.com. More information about this case can also be found at www.hbsslaw.com/Force-placedInsurance.
About Hagens Berman
Seattle-based Hagens Berman Sobol Shapiro LLP represents consumers, workers, whistleblowers and investors in complex litigation. The firm has offices in 10 cities and has been named one of the top plaintiffs' law firms in the country by the National Law Journal five times. Founded in 1993, HBSS continues to successfully fight for consumer rights in class-action litigation. More about the law firm and its successes can be found at www.hbsslaw.com. Visit the firm's class-action law blog at www.classactionlawtoday.com.
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