Bank Of America Faces Flood Insurance Complaints

By Joe Shortsleeve, WBZ-TV

BOSTON (CBS) – Some local families are furious with Bank of America. They claim the massive institution bullied them into buying expensive flood insurance which they didn’t need.

Chief Correspondent Joe Shortsleeve says when one Massachusetts woman decided to fight the bank, she quickly found out she had a lot of company.

Sue Lass knows her Rehoboth home is in a flood zone. There is a large stream right outside her front door. So, since 1994, she has always carried $100,000 in flood insurance. It more than protects Bank of America’s small mortgage of just $27,000.

WBZ-TV’s Joe Shortsleeve reports.

Lass was absolutely shocked when in 2009, Bank of America suddenly forced her to buy a large amount of additional flood insurance.

She says she was told “the additional insurance required is $145,000.”

See: Tips To Protect Your Home In Case Of Flooding

It increased her mortgage payment by 30 percent and today she reluctantly carries almost $250,000 in flood insurance, or nine times the value of her mortgage.

Lass says “oil just went up, food went up and now we have Bank of America pulling this on people.”

Sue Lass decided to fight Goliath, and quickly found out she was not alone. Now, she hopes to be part of a class action federal lawsuit filed in Pennsylvania. It claims Bank of America knowingly misrepresented federal rules when it demanded home owners buy this insurance.

Attorney Kai Richter on Minnesota filed the suit.

“What people are really upset about is this sort of piling on by one of this nations’ largest financial institutions. There are a lot of people really struggling to make their mortgage payments.”

Lass’s reaction when she learned the insurance was not required…

“I was furious! I called Bank of America and said you lied to me!”

But it does not end there. What makes Sue Lass really mad is that Bank of America admits making money on every policy.

She read out aloud the letter she got from the bank.

“Bank of America and its affiliates may receive a commission or other compensation in obtaining this coverage…”

Attorney Richter put it this way.

“It is not just that they are forcing homeowners to get coverage in excess of federal rules but they are trying to line their own pockets or line the pockets of their affiliates in the process.”

WBZ called Bank of America on February 15th to ask them about these charges, allegations and the lawsuit. We were told someone would get right back to us. We are still waiting.

A similar class action law suit was filed against Chase Bank in New York last June.

  • Lynn Sparling

    This is outrageous! Thanks for covering this story – more people need to know about this! WAY TO GO!

    • Mona Farrow

      Bank of America should have its banking rights taking away. They are just plain greedy. It is all about money, bonuses for the upper management and their shareholders’ profit s. Bank of American should have to pay back all of these people with INTEREST!!!!!!!!

      • Don

        It’s not Bank of America, its all banks. Citibank purchased my mortgage in 2008 and has raised my flood insurance premium annually by 10-20%. I have a $97K loan and a $210K insurance policy on a 3 bedroom home that can be rebuilt for about $140K. I don’t think the flood will claim the land that is the real value of the property. My flood insurance premium is now equal to more than 3 months of mortgage payments essentially driving up my annual out of pocket by 25%. And the insurance is NOT tax deductible. The banks are bunch of greedy suits who sit behind desks trying how to figure out ways to squeeze the last 5 cents from our pockets. Thanks for starting the fight. I’m joining in.

    • Mona Farrow

      Also, when I was purchasing my home, somehow Bank of America got wind of it, called me up and told me to come in and complete my mortgage appliication, I went, completed my application, only to be told by my realtor that they wer not the people he was sending me to for my loan. They did not refund me that appliication fee even though it was done under false pretense and at a higher interest rate. Bank of America need to stop their low-down, cheaping, manipulating ways! It it because of banks like them that we are in trouble we are now. The need to shut down all these large banks and go back to the smaller ones and credit unions!

  • Ramona Kingsley

    my mom was told by another bank she had to get flood insurance or they would take back her loan….she is NOT in a flood zone!!!

  • Rosalind Halzel-Hamilton

    We have the same issue every year. We live right on the water and our condo association carries 1 million dollars worth of flood insurance and they put on an additional $145,000. I have to call and fight them every year. That’s onw of the reasons we referr to them as Bank of Business!! FYI I live in MA

  • Woodsie

    Bank of America is the worst Bank in America, freaking thieves. Ooooops, my mistake there is one worse Banc of America Investments (now Merrill Lynch) that BoA manged to ruin in a heartbeat.
    Without a doubt a horrible, incompetent gang of thieves.

    Watch your money and invest and bank elsewhere!

  • Melissa Fitzgerald

    I’m not surprised Bank of America is doing this. They did it to me with a school loan I took out. Changed the interest rate and now I owe way more than I ever thought I would. Sad that they get away with this kind of behavior!!!

  • Ed Dracut

    I am not a fan of banc of America nor am I a fan of the feds using my money to bail out people who have built in a flood plain and don’t either carry any flood insurance or are under insured. You should only be forced to carry enough insurance to replace you home. If thats $50,000 or $5,000,000 that is what you have to be insured for no more no less. That should also be if you don’t have a loan on you home. Too often people in known flood zones don’t buy any insurance because the feds bail them out with our money. A city comes to mind. New Orleans. 10′ below sea level and we are rebuilding the city with my tax dollars. Now I know this women is not in mew Orleans but it’s the same thing

  • eddie

    I love bank of america the first song that comes to mind is “everything is good about you” by the supremes; but to be fair my rich aunt hates them–she closed all her accounts with them

  • chickenparm

    There’s three things that are ruining this country,
    the banks, the government, and the attorneys.

  • Ben

    Bank of America is run by Satan. They are always dreaming up new ways of gouging their customers. The only way to avoid it is NOT to be a customer of BofA!!

  • AnnMarie

    i think bank of America is doing this for the money
    that way too much for flood inc

  • mspippy

    Close your B of A accounts and open new ones at a Credit Union where they care about their customers.

  • Tj

    Bank of America is a business, just like all companies they find ways to charge fees for services. There is no point bad mouthing this corporation, just be proactive and find the bank, or credit union that suits your needs.

  • Cynic

    Citizens Bank has it’s own scams going.Check into their overdraft charges.

  • Shep Proudfoot

    Bank of Sleaze. Oh, but they’re so wonderful in all of their tv commercials. I believe that they were the first bank to start charging a 3 dollar atm fee.

  • FireGuyFrank

    I have my money with BOA. I recently was charged $30.00 for a stop payment — THIRTY bucks! How can the click of a mouse cost so much?

    Given this story, I’m thinking I need to rethink my banking options.

  • mark siraco

    They bought my loan from country wide so i refinanced with them. No sooner i did that they demanded i take out 200,000 in flood ins.When i called them it was almost like they were mocking me. I felt like they could care less about my concerns and i was told if i did,nt like it i could always refinance with another bank! So i did, i will never do business with that bank again nor will i i recommend them to anyone.PS i also contacted Markey,s office,Scott Brown,and John kerry and voiced my concerns.

    • Carol

      I also ended up with Bank of America after having ithrough Countrywide. I cancelled a refinance with them when they try to charge me for an additional $115,000 worth of coverage. Now they are forcing me to pay for an additional $78,000. worth of insurance for my current mortgage. I don’t want to refinance again but I really can’t stand Bank of America

  • Stef Fletcher

    Get ready for an elevation in the “terrorist” alert system. Every time the people get wise to a fraudulent scheme, carried out by the big banks/corporations, Homeland Security is there to divert attention…. Just watch the news over the next 3-5 days….. It isn’t the misleading allegations of “foreigners” abroad causing terror in our country — the most terrifying groups live, work, steal, lie and coverup right here in the US and they do it openly!!

  • Sue Sparling Lass

    To address Ed Dracut’s comment above, I lived on my property for almost l8 years BEFORE it was designated as a floodplain – in Massachusetts, one cannot build a new home on a federally protected floodplain. I agree that the requirement for coverage on homes like mine makes sense – I voluntarily carried THREE AND ONE HALF TIMES the amount that I was required to by the FEMA guidelines. The big problem is that YOU CANNOT BUY MORE THAN $250,000 of flood coverage – that’s the maximum available BY LAW, REGARDLESS OF THE SIZE OF YOUR MORTGAGE. How many mortgages in excess of $250,000 do you think there are out there today? Don’t you realize that when flood disaster occurs, the banks get paid first? THAT’ s where a lot of disaster relief money goes. The flooding events over the last few years,have left a big hole in relief funds, so FEMA encourages the banks to collect wherever they can – many homeowners are now being required by Bank of America and Chase (and probably others) to buy flood insurance when they DO NOT EVEN LIVE IN A DESIGNATED FLOOD AREA.. It seems to me that it would make more sense to raise the limit of flood insurance available to those carrying higher mortgages. By the way, disaster relief is paid by OUR tax dollars too.

  • Guest

    I have my mortgage with Bank of America and I have written them several times to send my mortgage statement on time. My mortgage payment is due on the first day of the month and Bank of America prints my mortgage statement 2 days before it it due, and I don’t receive the statement until the 16Th day of the month, and this makes my mortgage late. I have tried to pay online unsuccessfully and tried calling them and writing them and they won’t answer back. Who can I report them to!

  • Nancy

    I have had the same issue with BOA and flood insurance for several years. I would like to know more about the class action suit and how to join. I was forced to purchase flood insurance by BOA for several years at close to $300 a month on top of my mortgage payment. I have been outraged over this and had no support anywhere! This is enlightning to hear this story.

  • KAR

    I also have had the same issue and got the run around when I contacted BOA.

    I would like to know how to join the class action quit as well.

  • JayT

    Way past due to put ALL these industries back under Federal Regulation. Since they were deregulated in the early 80’s, every single one of these institutions has run rampant, abused the American people because of their greed and corruption and then, when failing because of their own bad business practices(again from greed) WE have to bail them out? They should have been allowed to fail. After all the main principle of free market is competition. If you can’t run you’re business well and fail others will rise up to take your place.

    Oil, banking, insurance, wall street, airlines, auto industry, cable and telephone companies ALL need to go back under regulation. Letting them police themselves was a bad, bad idea.

  • sunsudo

    Bank of America received $20bn in fresh US government aid and $118bn worth of guarantees against bad assets in 2009 the government is not going to shut her down. ombama has too much invested in it.

  • Connie

    I live in Portugal, BofA was charging me $5 for every ATM transaction PLUS 1% of the amount withdrawn, then 3% for every debit card transaction. I was paying $150 a month in fees to these thieves. SO WHAT DID I DO? I switched to USAA (and you don’t have to be in the military)….they do not charge for ATM fees (and will reimburse you if other banks charge you a fee up to $15 a month). This was a year ago…and to this day, I haven’t paid one cent in fees to USAA. Good riddance BofA

  • jack09

    And they wonder why Teddy Roosevelt broke the Banks and oil companies a hundred years ago..He was right ….

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