Forced to Buy Private Mortgage Insurance?
Last Updated on June 26, 2017
Attorneys working with ClassAction.org are no longer investigating this matter. The information here is for reference only. A list of open investigations and lawsuits can be viewed here.
At A Glance
- This Alert Affects
- Consumers who were required to buy private mortgage insurance (PMI) in connection with the purchase of their home.
- Residential home lenders, including the following, just as examples: Bank of America, Citigroup, JP Morgan Chase, Fifth Third Bank, PNC Bank, Wells Fargo, First Horizon Bank, M&T Bank and other banks.
- Additional Details
- PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of the home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.
Thank you to everyone who contacted us regarding this investigation. We've received hundreds of complaints regarding private mortgage insurance; however, after looking into the matter, the attorneys working with ClassAction.org don't believe the cases are as viable as they once thought. In fact, one lawsuit involving a PMI issue was just dismissed.
At this point, we no longer need to hear from people who had to pay PMI. That being said, anyone who believes they have a case is strongly encouraged to contact an attorney in their area to determine whether they have a matter worth pursuing. Remember, there are time limits for filing lawsuits, so it's important to act quickly.
You can view our current list of lawsuits and investigations here.
Class Action.org is investigating potential cases against numerous residential home lenders, including, just for example, Bank of America, Citigroup, JP Morgan Chase, Fifth Third Bank, PNC Bank, Wells Fargo, First Horizon Bank, M&T Bank, and many other banks, relating to their arrangements with private mortgage insurance (“PMI”) providers. We are investigating whether these lenders conspired with PMI companies in order to capitalize on the hundreds of millions of dollars their borrowers paid to the PMI companies in premiums each year, and whether the PMI companies are paying undisclosed kickbacks to the lenders in the form of purported “reinsurance” premiums.This practice may circumvent private mortgage insurance laws prohibition of kickbacks, referral payments and unearned fee splits, unjustly enriching the lenders at the borrower's expense.
It is alleged that lenders conspired with private mortgage insurers to create their own affiliated or “captive” reinsurers in order to capitalize on the hundreds of millions of dollars their borrowers paid to private mortgage insurers in premiums each year. Pursuant to this alleged scheme, each private mortgage insurer pays a portion of borrowers’ private mortgage insurance premiums to the lender’s captive reinsurance subsidiary in the form of purported “reinsurance” premiums. While these payments are purportedly for reinsurance services, the lender’s captive reinsurer received these payments while assuming very little or no actual risk under its contracts with the private mortgage insurers. It is alleged that this was accomplished through a secretive “pay-to-play scheme” that utilized carefully crafted “excess-of-loss” or purported “quota-share” reinsurance contracts that: (a) minimized risk exposure to bands of losses unlikely to be pierced; and (b) were intentionally designed to insulate the lender and its captive reinsurer from ever experiencing any out-of-pocket losses.
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