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Federal Court of Appeals Rules That Plaintiff Properly Alleged Bank of America Acted in Bad Faith in Force Placing Flood Insurance In Class Action Brought by Shapiro Haber & Urmy LLP

The lawsuit alleges that Bank of America breached its mortgage contracts and acted in bad faith by forcing borrowers to maintain excessive amounts of flood insurance.

BOSTON--(BUSINESS WIRE)-- Shapiro Haber & Urmy LLP today announces that on September 21, 2012, the United States Court of Appeals for the First Circuit issued a decision upholding claims by borrowers in a class action lawsuit against Bank of America. The lawsuit alleges that Bank of America breached its mortgage contracts and acted in bad faith by forcing borrowers to maintain excessive amounts of flood insurance.

In that decision in Kolbe v. BAC Home Loans Servicing, LP, d/b/a Bank of America, N.A. (Case No. 11-2030), the Court upheld claims that Bank of America breached the terms of FHA mortgages and violated U.S. Housing and Urban Development (HUD) guidelines by requiring borrowers to carry flood insurance in excess of the amount they owed on their loans. The Court found “strong support” for these claims in the mortgage contract, and noted that the mission of the FHA loan program is to make home ownership “affordable.”

The Plaintiff Stanley Kolbe is represented by Shapiro Haber & Urmy LLP, a Boston, Massachusetts based class action law firm. “This was a terrific victory for homeowners who are struggling to keep up with the cost of owning their homes,” said attorney Edward F. Haber who represents the Plaintiff Stanley Kolbe. “The Court recognized that the mortgage language and other evidence provides ‘strong support’ for our position that Bank of America is forcing people to pay for more insurance than they are obligated to have on their homes. And that improperly makes home ownership less affordable.”

On September 21, 2012, the Court of Appeals, in a second case, captioned Lass v. Bank of America, N.A. (Case No. 11-2037), also upheld similar claims that Bank of America “demand[ed] more flood insurance than required by federal law or the mortgage agreement,” and also upheld claims that Bank of America “unjustifiably charged borrowers for backdated coverage and commissions[.]” In particular, the Court noted that the plaintiff’s allegations of improper kickbacks or so-called “commissions” in connection with force-placed insurance “easily meet the threshold for a viable claim.” Plaintiff Susan Lass is represented by Kai H. Richter and E. Michelle Drake of Nichols Kaster, PLLP.

The Court’s decisions could have broad implications for people all over the United States who have mortgages not only with Bank of America, but other banks and mortgage servicers. If you believe you have been required to maintain excessive amounts of flood or fire insurance, please contact Shapiro Haber & Urmy LLP through our website www.shulaw.com, or call us toll free at 800-287-8119. Copies of the Appeals Court’s decisions can be found on Shapiro Haber & Urmy’s website. Additional information also may be obtained by calling Shapiro Haber & Urmy LLP toll free at (800) 287-8119.

Shapiro Haber & Urmy LLP
Adam Stewart, 800-287-8119

Source: Shapiro Haber & Urmy LLP