San Diego, CA: A California homeowner has filed a potential class action against JPMorgan Chase accusing the company of defrauding mortgagors by overcharging for unnecessary forced-place property insurance policies.
The suit claims breach of contract, intentional misrepresentation, negligent misrepresentation and violation of the California unfair-competition law, Cal. Bus. & Prof. Code § 17200.
The suit concerns a deed of trust between JP Morgan Chase and George Champion III Champion that required Champion to maintain property insurance on the house he bought. Champion bought a home in 2008, using loan proceeds from Chase. Chase secured the loan with a deed of trust that required Champion to maintain property insurance.
In his suit, Champion claims that after his original insurance policy lapsed, he obtained a new policy and faxed proof to Chase. Then, a month later, Chase allegedly purchased a backdated duplicate policy on his behalf from American Security Insurance Co, at an excessive rate.
According to the suit, the deed of trust gave Chase the right to "obtain insurance coverage, at lender' option and borrower' expense." Further, if Champion failed to maintain coverage himself, Chase could "do and pay for whatever is reasonable or appropriate to protect [its] interest in the property and rights"under the deed of trust,"the complaint states. And, the suit further states that JP Morgan Chase owns deeds of trust nationwide with identical provisions.
Champion says the forced policy was "unreasonable and inappropriate"because Chase purchased it when the company knew the property was covered and no loss had occurred during the lapse period.
Champion accuses Chase of earning undisclosed and non-contracted profits because it received kickbacks disguised as cost reimbursements. The complaint alleges Chase engaged in deceptive business practices that increased its profits while defrauding its customers.
The class action proposes to represent all Chase mortgagors nationwide who have been charged for forced placed insurance. The suit seeks injunctive and declaratory relief, damages according to proof, punitive damages, attorney fees, interest, and costs.