Class Action: Shellpoint Charges for Property Insurance Even if Homeowners Already Have a Policy

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A Chicago property owner alleges Shellpoint Mortgage Serving has unilaterally levied charges for force-placed property insurance despite possessing awareness that some borrowers already maintain their own property insurance policies. 

The 21-page complaint alleges the plaintiff’s mortgage, as a result of Shellpoint’s conduct, fell into default status and caused the man to have to pay for the “erroneous charges” assessed by the company. Per the case, the plaintiff’s situation with Shellpoint is not an isolated incident, as the company is alleged to have engaged in a widespread practice of charging Illinois consumers for property insurance even if a homeowner already possesses a policy for such.

“The forced-placed insurance caused Plaintiff’s mortgage payment to nearly double from $1,205.23 to $2,144.04,” the case says. “Specifically, the forced-placed insurance caused Plaintiff’s monthly escrow payment to increase from approximately $107 per month to $1,045.97 per month.” 

According to the lawsuit, the plaintiff was in the process of selling his property at the time Shellpoint force-placed the insurance, causing the loan payoff amount to increase. The suit relays that the plaintiff repeatedly disputed the lender-placed insurance charges with the defendant between May and July 2020. Shellpoint, in response, advised the plaintiff that he would be receiving a refund for the force-placed insurance charges once the company processed his submitted proof of insurance, the case states.

Per the lawsuit, the plaintiff, based on Shellpoint’s representations that it would provide a refund and “under mounting pressure to complete the pending sale of the subject property,” reluctantly paid the defendant for the force-placed insurance charges it sought for May, June and July 2020. 

Approximately one week after the plaintiff paid off his mortgage loan to Shellpoint and closed on the sale of his property, the defendant returned the funds on the basis that the payoff was short by roughly $1,200 as a result of real estate taxes Shellpoint paid on the plaintiff’s behalf, the complaint says. The suit claims Shellpoint’s contention that the plaintiff’s loan payoff was short was false given the company’s payoff letter explicitly included the real estate taxes it claimed the man owed. Accordingly, the sale of the plaintiff’s property, the closing for which had taken place on July 21, 2020, was not completed, the case says.

The following September, Shellpoint, the suit claims, sent the plaintiff a mortgage statement demanding payment of nearly $6,600 to bring the loan current. The statement also indicated that the defendant had charged the plaintiff an additional $524.23 for insurance and alleged he had an escrow shortage of $4,367.31, the case relays. 

The lawsuit says Shellpoint has “deceptively” collected a total of $3,078.01 from the plaintiff for force-placed insurance and at least $2,000 in accrued interest to which it was not entitled. The plaintiff also alleges Shellpoint falsely reported to the credit bureaus that he was more than 30 days late on his mortgage payments for May 2020 and August and September 2020, i.e., after the sale of his property.

According to the complaint, Shellpoint “receives kickbacks from the insurer that issued the insurance policy” the company unilaterally bought on behalf of the plaintiff without his knowledge or consent. 

The case looks to cover all persons in Illinois who have/had a mortgage loan serviced by Shellpoint for which the company purchased a property insurance policy and charged the costs of the property insurance policy to the individual’s mortgage loan while the person had an active property insurance policy on the property within the last three years and through the date of class certification. 

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