ALBANY, N.Y. (AP) — A federal judge approved a settlement Friday of a class-action lawsuit against JPMorgan Chase for its force-placed insurance practices, an agreement that could pay more than $300 million to about 750,000 mortgage borrowers.
The national settlement prohibits the bank for six years from getting commissions, kickbacks or reinsurance from the insurance, which it obtains when a homeowner's policy lapses.
Under U.S. District Judge Federico Moreno's order in Miami, class members will have to file claim forms to recover 12.5 percent of the net premiums they were charged between Jan. 1, 2008, and Oct. 4, 2013. Moreno also barred JPMorgan Chase and Assurant and its insurance subsidiaries "from inflating premiums" for six years.
New York-based JPMorgan Chase said Friday's decision formalizes a tentative agreement reached months ago about practices stopped before that. "We discontinued our reinsurance agreement a year ago and stopped accepting commissions several years ago," spokeswoman Amy Bonitatibus said.
Premiums for force-placed insurance, which were deducted from a homeowner's escrow account or added to the mortgage loan balance, were often much higher than the homeowners' initial premiums. Many of those covered by the lawsuit lost their homes to foreclosure.
The lawsuit estimated the value of injunctive relief from the bank changing its practices at $690 million.
"During those six years, Chase will accept no financial interest in the placement of force-placed hazard insurance policies outside of the premium itself and the protection of the policy," Moreno wrote.