J.P. Morgan Chase spokesperson Amy Bonitatibus added that, “We discontinued our reinsurance agreement earlier this year. The settlement will have no expected impact on our financials.”

The proposed deal is the first nationwide settlement of allegations that banks and FPI carriers overcharged homeowners for insurance in cases where the homeowners were having problems paying their mortgages. Given that similar suits are pending against nationwide lenders Bank of America, Citibank, HSBC Bank USA and Wells Fargo in the same court, the proposed settlement.

State and federal regulators and consumer advocates have complained for years that mortgage banks have been able to pad their profits by aligning with insurers that set insurance premiums extremely high in cases where the servicers impose insurance on distressed properties and then negotiated various deals with the carriers that funneled much of the premiums back to the servicers.

Federal mortgage agencies, Fannie and Freddie, the Consumer Financial Protection Agency, and the regulators of Fannie and Freddie are all scrutinizing force-placed homeowners insurance.

State regulators, including those in California and New York, are also taking a hard look at FPI costs. However, those agreements are not uniform. And, the latest settlement does not call for the restrictions Assurant agreed to in May with the New York Department of Financial Services. Amongst the provisions contained in the New York settlement with Assurant not included in the latest deal is creation of a permissible loss ratio as a way to reduce homeowners' premiums.

Adam Moskowitz, a partner at Kozyak Tropin & Throckmorton in Miami and co-counsel in the cases, confirmed that the banks named in the lawsuits have initiated mediation talks similar to those involving Chase and Assurant. "We are looking forward to working with all of the defendants to resolve all of these cases," Moskowitz said.

Force-placed homeowner’s insurance is projected to bring in $2.6 billion in written premiums annually. In the settlement documents, lawyers for the plaintiffs said, that the settlement ends insurance practices “we allege have unjustly enriched the defendants by more than $1 billion over the past five years.”

The settlement was submitted Friday to Judge Federico Moreno, chief of the federal district court in Miami. The judge is now being asked to certify the case as a class-action lawsuit. Florida is a hotbed for the lawsuits. Moskowitz said “Florida has more FPI in place than any other state.”

According to the settlement agreement submitted to the court Friday, Assurant and QBE, which was party to an earlier settlement in the same court but by another judge this year, “control more than 99% of the market for force-placed insurance.”

QBE and Wells Fargo in May agreed in the same court to settle a similar suit. That settlement mandated larger potential payouts than the latest settlement, but did not include the same restrictions on future business arrangements.