Washington woman's suit claims Wells Fargo overcharged her for flood insurance
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PITTSBURGH TRIBUNE-REVIEWFriday, April 8, 2011
Wells Fargo Home Mortgage has been forcing homeowners to buy more flood insurance than federal law requires and has even bought the insurance and billed homeowners for the unnecessary coverage, according to a class-action lawsuit filed Thursday in federal court.
A Wells Fargo spokeswoman had no immediate response.
Desiree Morris of Washington, Pa., claims in the lawsuit that Wells Fargo Home Mortgage bought her mortgage shortly after she closed on her house in 2009. She owed about $113,000 on the house, but the company bumped her flood insurance up to $129,800 in November 2010, the lawsuit says.
The company also sent her a letter in December demanding that she obtain coverage up to the National Flood Insurance Program limit of $250,000 even though federal law only requires her to cover the amount she owes on her mortgage, the lawsuit says.
The next letter, in February 2011, announced the company had purchased $94,000 worth of additional flood insurance for her and that the $893 for the 90-day policy would be charged to her escrow account.
It was followed by a letter in March announcing that a revised insurance policy would be issued to her. A week later, she received another letter saying that the company had purchased $82,200 in flood insurance for her and the $780.90 for that 90-day policy would be charged to her escrow account.
The second notice also informed Morris that Wells Fargo would purchase a full-year policy at $250,000 coverage if she didn't, and that the company would receive a commission for purchasing the policy.
It wasn't clear from the lawsuit whether the second 90-day policy was in addition to or in lieu of the first one. Charles Frohman, the Minneapolis attorney representing Morris, couldn't immediately be reached for comment.
The company has done the same thing to hundreds and possibly thousands of other homeowners in federally designated flood-plain areas across the country, the lawsuit says.
Morris is claiming the company violated state and federal real estate and lending laws as well as breached mortgage contracts with her and other homeowners. The company also unjustly enriched itself on the payments it received from insurers for the policies it forced on the homeowners, the lawsuit says.
The plaintiffs are seeking actual and punitive damages including restitution of the excess premiums charged to their escrow accounts.
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