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星期四, 2月 18, 2016

HSBC TO PAY $4 MILLION, REFUND HOMEOWNERS FOR ACCEPTING COMPENSATION TIED TO FORCE-PLACED INSURANCE

HSBC TO PAY $4 MILLION, REFUND HOMEOWNERS FOR ACCEPTING COMPENSATION TIED TO FORCE-PLACED INSURANCE Mortgage Servicer Will Provide More than $2.5 Million in Refunds to Thousands of Massachusetts Borrowers
BOSTON – National mortgage lender and servicer HSBC has agreed to pay $4 million to resolve allegations that it received commissions and other kickbacks relating to force-placed insurance policies that it procured for struggling Massachusetts homeowners, Attorney General Maura Healey announced today.
Under the assurance of discontinuance, filed today in Suffolk Superior Court, HSBC will provide $2.675 million in restitution to affected Massachusetts homeowners, and pay an additional $1.4 million to the Commonwealth. The settlement provides for refunds to thousands of Massachusetts borrowers who were improperly charged force-placed insurance premiums that included commissions or other payments to HSBC. 
“Mortgage servicers should not enrich themselves through insurance products at the expense of struggling homeowners,” AG Healey said. “This agreement ensures that HSBC returns the money to Massachusetts consumers it received in violation of state laws.”
Force-placed insurance is property insurance that mortgage servicers obtain on behalf of homeowners when they believe homeowners have failed to maintain adequate homeowners insurance. Force-placement often occurs in circumstances in which a borrower has fallen behind on his or her mortgage payments and other bills. 
Mortgage servicers like HSBC often rely on force-placed insurance companies to monitor whether borrowers have maintained adequate homeowners insurance coverage. When a borrower is believed to have failed to maintain appropriate coverage, the insurer issues a force-placed insurance policy and the mortgage servicer charges the premium for the policy to the homeowner. Premiums for these force-placed insurance policies are high, often as much as two- or three-times as expensive as voluntary insurance, and the coverage provided is limited.
Until June 1, 2012, HSBC received compensation that was tied to the force-placed insurance premiums charged to HSBC’s borrowers, which the AG’s Office alleges created an improper conflict of interest and violated state consumer protection laws.
An affiliate of HSBC was allegedly paid commissions by the insurance company Assurant, Inc. (Assurant) for the sale of the force-placed insurance policies despite the fact that HSBC’s affiliate did not perform any of the traditional functions of an insurance agent. HSBC also participated in Assurant’s quota-share reinsurance program, which enabled its affiliate to share in the profits of Assurant’s highly lucrative force-placed insurance business. 
Under the terms of today’s settlement, HSBC agrees not to accept commissions, profit-sharing, or reinsurance proceeds or any free or below market value services from insurance carriers that it uses to write force-placed insurance policies on Massachusetts borrowers’ properties in connection with such policies.