Lawsuit blasts Pennsylvania flood policies
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PITTSBURGH TRIBUNE-REVIEWSaturday, April 9, 2011
Two Pennsylvania homeowners are suing their mortgage companies for requiring too much flood insurance on their homes.
In separate federal class-action lawsuits, Rick Wulf, 32, of Schuykill County and Desiree Morris of Washington claim the banks that bought their mortgages required more insurance than federal law stipulates.
Bank of America said it had a "bigger interest" in his property than what he owes, Wulf said, but never explained what that might be. He said bank representatives often gave conflicting answers to other questions.
"Every time I talked to a different person, they had a different answer," he said Friday.
Bank of America spokeswoman Shirley Norton said the lawsuit is baseless because banks are allowed to require insurance coverage at any amount up to the federal limit of $250,000.
Wulf and others in his lawsuit are represented by Nichols Kaster PLLP of Minneapolis, which filed similar class-actions against Bank of America in Massachusetts and Chase Home Finance LLC in California and New York.
The firm filed its fifth lawsuit on Thursday in Pittsburgh on behalf of Morris and other homeowners facing similar demands from Wells Fargo Bank N.A. and Wells Fargo Home Mortgage Inc. Morris claims the company violated state and federal real estate and lending law, and breached mortgage contracts while unjustly enriching itself.
James Hines, a Wells Fargo spokesman, said the lender had no comment on the lawsuit.
Morris bought her house in 2009 and financed it through Victorian Finance LLC. She bought flood insurance coverage of $118,000, slightly more than the home's purchase price.
Wells Fargo Home Mortgage bought her mortgage shortly afterward. In November 2010, the coverage was bumped up to $129,800. A month later, Wells Fargo sent her a letter demanding she increase coverage up to the National Flood Insurance Program limit of $250,000, even though the U.S. Department of Housing and Urban Development requires only enough to cover what's owed on the house, the lawsuit says.
The letter said if Morris didn't purchase the coverage, Wells Fargo would do so through its affiliate, Wells Fargo Insurance Inc.
In February 2011, the company sent her a letter saying it purchased $94,000 of coverage for 90 days at a cost of $893, which it would charge to her escrow account. A month later the amount changed to $82,200 in coverage for 90 days, at a cost of $780.90 to her escrow.
Kai Richter, one of the attorneys representing Morris, said the reduction shows "how arbitrary they are in determining the 'required' amount."
Thousands of people potentially could join the Wells Fargo case because it's one of the largest banks in the country, Richter said. Excess insurance coverage eventually causes homeowners' mortgage payments to increase, he said. One plaintiff in Massachusetts is paying $200 more monthly, he said. That could happen to Morris, he said.
"For someone in her 20s, just starting out in her life, it's a real burden," he said.
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