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Forced Placed Insurance

RoundPoint Mortgage Logo

RoundPoint Mortgage Servicing Corporation has agreed to refund money to borrowers to settle a class action about lender-placed insurance (LPI, also known as force-placed insurance). Mortgage lenders require that homeowners have an LPI policy when the homeowners’ insurance lapses or when the homeowners’ policy is not considered acceptable to the lender.

Centennial Bank Logo

Plaintiff Simeon Penton bought a condominium in Florida, which he financed with a mortgage eventually assigned to Centennial Bank. The complaint for this class action claims that Centennial wrongly decided that he did not have enough flood or hazard insurance and force-placed insurance on the property, first through Overby-Seawell Company (OSC) and later through Great American Insurance Company. 

Selene Finance Logo

Selene Finance has agreed to settle a class action alleging that it charged excessive rates for force-placed insurance and placed it in a manner that enabled it to received kickbacks from the insurer. Force-placed insurance, or lender-placed insurance, is insurance placed on a property that is mortgaged or that carries a home equity line of credit.

Avatel Technologies Equipment

Force-place insurance, also known as lender-placed insurance (LPI), is often found in connection with mortgages, when the borrower fails to maintain an adequate policy and the lender force-places one to protect against property losses. In this case, the insurance was placed on voice, data, or video equipment leased through financing, but the allegations the complaint makes are similar: that the equipment lease and finance companies got unearned kickbacks from the insurance companies, which artificially inflated the premiums charged—making them up to ten times higher than those available on the open market. The complaint also alleges that the companies entered into a scheme by which no individual underwriting was done, but the individual premiums charged were very profitable.

Fay Servicing Logo

Fay Servicing has agreed to settle a class action alleging that when it required residential borrowers to have LPI (lender-placed or force-placed insurance), it received an unauthorized benefit, causing the premiums for the insurance to be higher than necessary.

Residential Credit Solutions Logo

Mortgage lender Residential Credit Solutions has agreed to settle a class action alleging that when it required borrowers to have LPI (lender-placed insurance, also known as force-placed insurance) on a mortgage or home equity loan, RCS placed the insurance in a manner that caused it to receive unauthorized benefits, unfairly raising the cost of the premiums.

Carrington Mortgage Services Location

Carrington Mortgage Services has agreed to settle a class action alleging that whenever the company required a borrower to have LPI (lender-placed insurance, also known as force-placed insurance) it received kickbacks or unauthorized benefits that raised the cost of the insurance.  The case concerns LPI issued by American Modern Insurance Group, Inc., American Modern Home Insurance Company, The

M&T Logo

The complaint alleges that M&T has an arrangement with insurance company ASIC under which ASIC is M&T’s exclusive provider of FPI and also performs mortgage-servicing functions. In exchange, the complaint alleges that ASIC pays M&T kickbacks on FPI, which violates provisions in the borrowers’ mortgage contracts. But this complaint alleges that there’s an even more complex scheme. It claims that M&T pays ASIC for a master insurance policy which covers all of its mortgage loans. When a borrower’s own policy lapses, instead of M&T purchasing a new policy for the borrower, the complaint says, ASIC issues a certificate of insurance from the master policy, so that no individual underwriting ever takes place. The implications of all this lead to allegations of violations of RICO statutes as well as other laws.

Wells Fargo Logo

When plaintiff Paul Hancock bought a vehicle in Februrary 2016, the complaint for this class action says, he financed it with a loan from Wells Fargo and purchased an auto insurance policy through Allstate. However, in May 2016, the complaint says, Wells Fargo force-placed an insurance policy on his vehicle and charged him $598 for it. The complaint alleges that Hancock repeatedly contacted Wells Fargo to tell them that he already had the necessary insurance coverage, but that the bank refused to return the money they had collected and continued to try to force him to pay for the insurance, including being charged a late fee as soon as the CPI policy was established. According to the complaint, Hancock was only one of 800,000 auto loan customers ensnared in the Wells Fargo and National General Insurance Company scheme, one that pushed 250,000 of them into delinquency and caused the unlawful repossession of nearly 25,000 vehicles.

Lender-Placed Insurance

LPI (lender-placed insurance) is placed on a property by a lender when a borrower’s insurance policy lapses or when the borrower does not maintain an acceptable homeowner insurance policy. When PHH Mortgage placed an LPI policy on a property, it paid the premiums to the insurer and then charged the borrower for the premiums.

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