On October 30, the U.S. District Court for the Northern District of California dismissed a putative class action alleging that the lender breached certain mortgage contracts and violated state and federal law through its policy and practices requiring borrowers to maintain flood insurance sufficient to cover the replacement value of their homes. McKenzie v. Wells Fargo Home Mortg., Inc., No. 11-4965, 2012 WL 5372120 (N.D. Cal. Oct. 30, 2012). The borrowers claim that the FHA requirement that flood insurance must cover the remaining balance of the mortgage served as a cap on the flood insurance amounts the lender could require. Declining to follow the reasoning of the court in Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2012 WL 4240298 (1st Cir. Sep. 21, 2012), the McKenzie court held that because the deeds of trust authorized the lender to set the required level of insurance and the FHA requirement is a statutory floor, the lender did not breach the mortgage contracts by requiring coverage above the outstanding principal loan balance. Therefore, the court dismissed those claims with prejudice. For the same reasons, the court dismissed with prejudice the borrowers’ claims that letters sent to the borrowers notifying them of insufficient coverage altered the terms of their loans and required the lender to make additional disclosures under TILA. The court dismissed, with one opportunity to amend, claims that the lender breached the contract by force-placing insurance through an affiliate that charged excessive amounts allegedly in exchange for kickbacks.