Berger & Montague filed a class action complaint in the
United States District Court for the District of Rhode Island
alleging that Citizens Bank requires certain borrowers to purchase
flood insurance in excess of what their mortgage contract and
federal law requires.
On June 5, 2014, the Court preliminarily approved the settlement
of this matter. The following documents are available for
For more information, please visit www.citizensfloodinsurancelitigation.com.
Force-Placed Flood Insurance
When a lender originates or services a home equity or mortgage
loan for customers who pledge their home or condominium unit
located in a "Special Flood Hazard Area" as collateral, federal law
requires proof of adequate flood insurance as a condition of
obtaining the loan.
Subsequent to closing, Citizen's Bank sent some customers form
notices informing them that their flood insurance is inadequate
under federal law and/or the mortgage contract. Citizens Bank
required that these customers purchase flood insurance that exceeds
the bank's security interest in the home or, alternatively, exceeds
the replacement cost of the home. Citizens Bank misrepresented that
the flood insurance requirement is in line with federal laws for
homeowners in "Special Flood Hazard Areas." Citizens Bank
then continued to send a series of letters asking for more
information and explaining Citizens Bank's intention to force-place
Ultimately, Citizens Bank purchased the flood insurance policy
at a high premium and assessed the premium costs on the homeowner.
The cost of the policy was either deducted from the home equity
account or added to the mortgage balance. As a result, the
customers had no choice but to pay the premiums.
Force-Placed Flood Insurance Class Action
Berger & Montague's force-placed insurance group vigorously
represents homeowners against major banks. To find out about
investigations, as well as both pending and settled cases, please
force-placed insurance case page.