Class Action Filed in Florida Over Force-Placed Insurance Kickbacks

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A proposed class action filed today alleges a host of insurance and mortgage companies manipulated the force-placed insurance market through collusive agreements that would pay them illegal kickbacks and “other forms of improper compensation.” The 59-page suit names the below defendants:

The five named plaintiffs claim the defendants profited from charging borrowers “undisclosed, unauthorized, and illegitimate costs” associated with their force-placed insurance. These profits, the suit continues, included but were not limited to payments disguised as “commissions” paid to the mortgage server; “expense reimbursements” paid to mortgage servicers; reinsurance premiums that, “in fact, carry no commensurate transfer of risk”; and payments for performing functions that are “made below-cost and often have nothing to do with the placement of insurance coverage.”

As a result of these “gratuitous and unearned” kickbacks, the lawsuit claims, the defendants received a rebate on the cost of force-placed insurance, which ultimately falls on homeowners since the charges are deducted from borrowers’ escrow accounts.