by Cora Currier

A class action suit in Florida that moved forward this week highlights a little-appreciated aspect of the housing market—the cozy relationship between banks and insurance companies that often results in overpriced home insurance for already struggling borrowers.

As the American Banker reported, a federal judge in Miami on Tuesday opened the door to a class action against Wells Fargo. More than 20,000 Florida homeowners can now sue Wells Fargo and an insurance company, QBE, for allegedly overcharging for insurance. More than $50 million in insurance premiums are at issue, according to American Banker.

The suit itself, filed last year, is sealed, but the judge, Robert Scola, laid out the allegations against Wells Fargo. The judge didn’t rule on the case itself, but rather allowed it to go forward as a class action. In his decision, the judge cited the plaintiff’s claims that Wells Fargo and QBE “colluded in a scheme to artificially inflate the premiums charged to homeowners.”

The judge also said that Wells Fargo has actually threatened to retaliate against homeowners who join the suit.

A spokesman for Wells Fargo said in an emailed statement that, “the judge’s recent ruling only addresses the certification of the class in this case and not any of the underlying claims. We disagree with a number of the representations made by the plaintiffs’ attorneys.”

They also disputed the judge’s claim that they were threatening retaliation for the suit, saying “we made our argument in a purely procedural context in connection with the class certification motion. Wells Fargo has no intention of taking the actions referenced with regard to our customers.”

QBE did not respond to our requests for comment.

The case sheds light on the world of force-priced insurance, an industry that has grown in the years since the housing crisis. Among all the suits and scandals related to the crisis, troubles with force-placed insurance have flown largely under the radar. Here’s some background on the lawsuit, and why there might be more of them to come.

What force-placed insurance is, and why it’s controversial

Force-placed insurance is just what it says it is—insurance you are forced to buy.

This insurance is meant to protect mortgage lenders against damage to the underlying homes. If the homeowner doesn’t have their own insurance on their house, or they’ve let it lapse, most mortgage contracts allow the lender to buy the insurance themselves and pass on the cost to the borrower.

Some homeowners, though, have complained of sudden and excessive penalties, as well as policies that seem to be added unnecessarily—and sometimes retroactively—to their bills. What’s more, the cost of the force-placed insurance can be ten-times that of regular policies, adding to homeowner’s burden of debt, and increasing the chance of default—which is bad for homeowners and investors in the mortgage market.

Lenders, of course, need to make sure that the asset behind their loan is safe. Force-placed insurance is expensive, the industry argues, because it is high-risk—if you’re the kind of homeowner that doesn’t have any insurance on your property, you’re probably also more likely to default. And because it’s often replacing lapsed insurance, insurers take on more risk because it has to happen quickly.