Bank of America Corp. was sued in a Florida federal court by homeowners who allege the company overcharged them for "force-placed" insurance, Bloomberg News reported yesterday. Force-placed insurance, which mortgage companies can purchase for homeowners when their policies lapse, is a "financial windfall: for Bank of America," according to a complaint filed on Monday. "A substantial portion of the premiums are refunded to Bank of America or its affiliates and subsidiaries through various kickbacks, reinsurance and/or unwarranted commissions," according to the homeowners, who seek to proceed on behalf of U.S. borrowers who were charged for the insurance by Bank of America or an affiliate. In April, New York's Department of Financial Services, saying it was seeking a basis for "consistently high profits" at the expense of homeowners and investors, said it was investigating whether force-placed insurance rates are excessive. It said that it was requiring information from insurers including Balboa Insurance Co., which is also a defendant in the Florida case.
