Nichols Kaster, PLLP Files Class Action Against Citibank and Midland Mortgage for Alleged Force-Placed Insurance Abuses, on First Day of New York Department of Financial Services Hearings

Syracuse, NY (PRWEB) On May 17, 2012, Nichols Kaster, PLLP filed a class action lawsuit in the Northern District of New York on behalf of Plaintiff Gordon Casey and other borrowers with mortgages serviced by Citibank or Midland Mortgage. The Complaint alleges that Citibank and Midland Mortgage routinely force-place excessive amounts of flood insurance on borrowers, and improperly arrange for commissions for themselves or their affiliates on force-placed policies.

Casey’s story was the subject of a recent article in the Syracuse Post-Standard. According to the Complaint, Citibank unlawfully required Casey to carry flood insurance coverage that exceeded the amount of his loan balance by more than $100,000. After Casey’s mortgage was acquired by Midland, Midland required Casey to carry an even greater amount of flood insurance ($237,349). Midland’s requirement was approximately fourteen times Casey’s small loan balance of less than $17,000.

The lawsuit further alleges that both Citibank and Midland Mortgage purchased expensive “force-placed” insurance coverage out of Casey’s escrow account to meet their onerous flood insurance requirements, which are inconsistent with the terms of Plaintiff’s mortgage, HUD requirements, and federal law. In connection with this force-placed coverage, the lawsuit alleges that both lenders and/or their affiliates received improper kickbacks or commissions.

“In today’s economic environment, many homeowners are struggling to make their mortgage payments, and it is wrong for lenders to add to their burden by demanding wholly unnecessary and unauthorized flood insurance that is not required by borrowers’ mortgages or federal law.” said Richter. “It is particularly egregious for lenders to arrange for commissions for themselves or their affiliates in connection with force-placed coverage.” continued Richter.

On the same date that the lawsuit was filed, the New York Department of Financial Services began three days of hearings in connection with its own investigation of the force-placed insurance practices of several banks, including Citibank. The very first witness who testified was a Citibank borrower from Staten Island, New York.

In his class action Complaint, Casey seeks relief on behalf of himself and other borrowers across the country who have been similarly affected by Citibank’s and Midland’s alleged conduct. Based on this alleged conduct, the Complaint asserts claims against Citibank and Midland for (1) breach of contract/breach of the covenant of good faith and fair dealing; (2) unjust enrichment; (3) breach of fiduciary duty in connection with mortgage escrow accounts; (4) violation of the New York Deceptive Practices Act; and (5) violation of the federal Truth-In-Lending Act.

The case is entitled Casey v. Citibank, N.A. et al., No. 5:12-cv-00820-DNH-DEP (N.D.N.Y.). Plaintiff is represented by Donald Nichols, Kai Richter, and E. Michelle Drake from Nichols Kaster, PLLP. Nichols Kaster has offices in Minneapolis, Minnesota and San Francisco, California, and is currently pursuing similar cases against JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., U.S. Bank, N.A., and RBS Citizens, N.A. Additional information is located here or may be obtained by calling Nichols Kaster, PLLP at (877) 344-4628.