Pennsylvania Couple Had Their Fill of Force-Placed Insurance

Wilkes-Barre, PAWhen a prominent bank forced its ill-timed and allegedly inappropriate influence on a Pennsylvania couple, costing them extra lenders insurance premiums that the bank refused to refund, the affected residents promptly filed a Force-placed insurance lawsuit.

According to Business Wire (11/14/13), the plaintiffs secured a home equity line of credit (HELOC) with M&T Bank, but had yet to capitalize on any of the HELOC capital when the bank duly informed the homeowners their abode was in an area of Pennsylvania identified, according to the bank, as a Special Flood Hazard Area (SFHA), as reflected by maps produced by the National Flood Insurance Program.

This was the beginning of a Lender insurance headache that eventually led the Dobish family - the plaintiffs in the case - to pursue legal action.

The plaintiffs did not agree their home was in a flood-prone area and backed up their claim with documentation from the City of Wilkes-Barre, where the plaintiffs live. According to Business Wire, the evidence obtained from the city clearly demonstrated the Dobish home did not sit in a flood-prone or SFHA area.

That wasn’t good enough for the bank, according to the report. M&T, it is reported, ignored the evidence and issued Force-Place insurance on the home without the homeowner’s consent.

Force-Place insurance is a response a lender can take if a homeowner has, for whatever reason, dropped the ball with regard to having adequate insurance on a mortgaged home. A lender does need to safeguard its investment, and few would quarrel with that. However, where consumers have cried foul with the concept of a lender forcing insurance on a homeowner is when the insurance is either not really necessary or when the lenders insurance is at a substantially higher premium - and for sometimes less coverage - than that of a more traditional insurance product.

Often, the results translate into Force-Place Insurance Lawsuits - and this is what has happened here. Not satisfied with documentation submitted by the City of Wilkes-Barre, M&T allegedly issued a backdated Force-Place Insurance policy for flood insurance through a subsidiary of Assurant.

According to the report, the plaintiffs responded by canceling their home equity line of credit. In turn, M&T is reported to have issued a refund of the unused portion of the flood insurance premium, but refused to extend a refund of the additional flood insurance premium the bank had retained. This, in the face of additional documentation - this time from the Federal Emergency Management Agency (FEMA), that conclusively determined that the Dobish home was not threatened in any fashion from potential flood waters.

Mr. & Mrs. Dobish had quite enough of that, and promptly contacted a Forced-Place Insurance lawyer.

Various allegations have suggested some insurers have formed mutually beneficial relationships with banks and other lenders, offering commissions, and even undertake kickback schemes that serve as a source of additional revenues for the parties involved, at substantial cost to the homeowners. Forced-Place Insurance attorneys remain busy with a number of cases filed by disgruntled homeowners.

The case is Dobish v. M&T Bank Corp. et al. (No. 1:13-cv-01098-RJA), filed on November 5, 2013, in US District Court for the Western District of New York.