Bank of America (BofA) has been charged by homeowners in a Florida federal court over allegations for charging them excessively in connection with so-called force-placed insurance.
The home owners were quoted by Bloomberg as saying, "A substantial portion of the premiums are refunded to Bank of America or its affiliates and subsidiaries through various kickbacks, reinsurance and/or unwarranted commissions."
Commenting on the case, the New York regulator said there were "serious concerns" that premiums for the insurance have been "artificially inflated" and an investigation will be conducted into relationships among the insurers, banks, mortgage servicers and insurance agents and brokers.
Joseph Gallagher, one of the plaintiffs of the case said the force- placed policy, which only covered wind and hail damage, was twice as expensive as its regular, comprehensive insurance policy.
The Florida plaintiffs have sought for unspecified damages.
