By Dena Aubin
April 7 (Reuters) - Bank of America and QBEInsurance Corp have agreed to pay $228 million to settle claimsthat they engaged in a kickback scheme inflating the cost ofinsurance that homeowners were forced to buy, according to acourt filing.
The deal reached in Miami federal court is the latest ofseveral multi-million-dollar settlements reached over"force-placed" insurance, which is coverage that lenders arrangeto protect their interest in a property when a homeowner'sinsurance has lapsed.
Mortgage agreements do allow lenders to charge homeownersfor the insurance, but lawsuits have accused banks of abusingthat right by passing on to homeowners the costs of kickbacksthey received from insurance providers.
Filed in 2012, the proposed class action against Bank ofAmerica and QBE Insurance Corp accused them of violating stateand federal laws, including the U.S. Racketeer Influenced andCorrupt Organizations Act (RICO.) QBE Insurance Corp is part ofAustralia-based QBE Insurance Group Ltd..
The settlement was disclosed in a motion for preliminaryapproval filed by plaintiffs in the U.S. District Court for theSouthern District of Florida on Thursday. Plaintiffs also askedthe court to name law firms Kozyak Tropin & Throckmorton,Podhurst Orseck, and Harke Clasby & Bushman as class counsel.
"Bank of America believes that its lender-placed hazardinsurance practices comply fully with state and federal law,"bank spokesman Richard Simon said. "Nevertheless, in order toput an end to this litigation, we have reached a settlement thatis acceptable to all parties.
A spokesman for QBE could not immediately be reached forcomment.
"We are thankful to the defendants who decided to settlethis matter to try and help their customers," Adam Moskowitz, alawyer for the plaintiffs said.
The agreement is the latest of several reached betweenhomeowners and major banks since September over force-placedinsurance. Other settlements include $300 million with JPMorganChase, $110 million with Citibank and up to $32million with HSBC Bank USA.
Wells Fargo Bank settled in March for an undisclosedsum.
The latest settlement covers Bank of America customers whowere charged for force-placed insurance between January 2008 andFebruary 2014.
"Each class member stands to recover hundreds, if notthousands, of dollars as a result of the settlement," lawyersfor the plaintiffs said in Thursday's filing.
The case is: Cheryl Hall et al v Bank of America N.A. et al,U.S. District Court, Southern District of Florida, No12-cv-22700 (Reporting by Dena Aubin in New York; Editing by KevinDrawbaugh and Alden Bentley)