New York, NY: On May 13, 2011, Plaintiff Kent Farmer filed a class action lawsuit against Bank of America and Balboa Insurance Company in U.S. District Court in the Central District of California. The lawsuit alleges that Bank of America routinely "force places" exorbitantly priced Balboa hazard insurance on borrowers with lapsed hazard insurance.
According to the complaint, Bank of America has a pre-existing agreement with its affiliate insurer, Balboa, whereby Balboa agrees to issue forced placed insurance at a premium cost to homeowners. The Balboa insurance is often issued months after the borrower' original insurance lapsed. Bank of America allows Balboa to backdate the policies to the date of the lapse itself, forcing homeowners to insure against the past.
The class action complaint seeks relief on behalf of Farmer and other borrowers across the country, who have been similarly affected by Bank of America' alleged conduct. The complaint asserts that Bank of America and Balboa committed fraud, breached their contracts with their customers, and were unjustly enriched by their unlawful practices.