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.”
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.