Featured News 2013 Homeowners Sue Banks Over Flood Insurance Program

Homeowners Sue Banks Over Flood Insurance Program

Homeowners in New York recently rose up against Citibank and MidFirst Bank in order to argue against the high-premium flood insurance policies they were being forced to pay. According to one source, Judge David N. Hurd of the United States District Court for the Northern District of New York allowed homeowners to push their claims through and start a legitimate lawsuit against the banks. Plaintiffs are claiming that Citibank and MidFirst Bank have been forcing unnecessary flood insurance coverage on borrower’s mortgage contracts, even when floods are not an imminent threat in the location of the home.

The complaint claims that the flood insurance that is forced upon borrowers is above the amount that is required by the mortgage contracts and the federal law. Therefore, plaintiffs argue that the amounts are not fair and that the banks should not require such high premiums. The banks argue that the court should dismiss the case and are asserting that borrower’s mortgage contracts permit them to place high premium flood insurance policies in the amounts that the bank deems necessary. They argue that because of this caveat in the contract they have the right to force these expensive flood insurance policies on their borrowers. The court denied the defendant’s motion to dismiss the case and has decided that plaintiffs may have a rightful claim against the banks.

The courts are upholding the plaintiff’s arguments that they were subject to a breach of contract, a breach of fiduciary duty, a violation of the Truth in Lending Act and a violation of the New York Deceptive Practices Act. The plaintiffs also claim that they were subject to unjust enrichment of a policy. Attorneys for the plaintiffs claim that the homeowners were told about a particular flood insurance policy upon choosing to borrow with one of these banks. Later, when they signed their contract, they were informed of a different set up which involves much higher flood insurance premiums. The second flood insurance proposals included much higher requirements and harmed thousands of borrowers.

Homeowners say that they believe that thousands have been cheated and robbed of their money be the extraordinarily high and unnecessary flood insurance. There were often unwarranted fees and charges associated with the insurance as well. Plaintiffs believe that the banks tagged on these expenses to make additional profit and that the charges were not warranted for any specific reason. Plaintiffs believe that each time the banks require this expensive flood insurance, they are able to receive financial benefits from the insurance companies who place the policies. Because they believe that the entire insurance scheme is selfish and is not a requirement by federal law, they believe that the banks are only creating the policies for their own gain.

All U.S. borrowers with mortgages serviced by Citibank and MidFirst Bank that have been forced to purchase these high flood insurance policies may be affected by the court ruling. If the banks are deemed guilty of breaching contracts, then homeowners may be refunded for the unnecessary costs. If you are a homeowner who has been cheated by your insurance company, you have the right to stand up against them and file a lawsuit. Often people are afraid to take this brave step and work towards justice in a case.

Instead, they will simply comply with unfair and illegal practices because they don’t want to stir up controversy. Don’t allow an unscrupulous mortgage lender to steal your money. Instead, hire a local real estate attorney and seek the justice that you deserve in your case. With the right professional there to help you, you may be able to receive a settlement that will cover your losses and hold a bank or mortgage company accountable so that they will deliver and honest service to those in your community.

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