PHH Mortgage Lender-Placed Insurance Class Action Settlement

Mortgage borrowers charged for lender-placed insurance by PHH Mortgage Corp. may qualify for benefits under terms of a recent class action settlement.

This settlement resolves similar claims raised in three separate PHH Mortgage class action lawsuits brought by plaintiffs Patrick Gallo, Kevin Finch and Joseph Burroughs.

These plaintiffs took issue with the way PHH Mortgage handled lender-placed insurance policies tied to its mortgage agreements. They raised several contractual and fraud-based claims against PHH Mortgage. They also raised claims for violations of the federal Racketeer Influenced and Corrupt Organizations Act and of the consumer protection laws of California, Illinois, and New Jersey.

Lender-placed insurance – also known as force-placed or creditor-placed insurance – is a type of homeowner’s insurance that automatically goes into effect when a mortgage borrower fails to satisfy the lender’s insurance requirements, such as by allowing their own homeowner’s policy to lapse or by failing to purchase adequate homeowner’s insurance in the first place.

Once a lender-placed policy goes into effect, the homeowner is on the hook for paying premiums. Many mortgage lenders require borrowers to agree to a lender-placed insurance provision as a condition of their mortgage agreements.

Critics say that lender-placed insurance arrangements are vulnerable to abuse by lenders and insurers, at the borrower’s expense. Policies are generally chosen by the lender, who unlike the homeowner does not have the incentive to shop for a policy that gives good value. As a result, lender-placed policies may charge extraordinarily high premiums while providing meager coverage.

The plaintiffs allege that PHH Mortgage received unauthorized benefits under its own lender-placed insurance policies and that the amounts charged to homeowners under these policies were excessive. They also claim PHH Mortgage accepted improper kickbacks from insurer Assurant in the forms of expense reimbursements or expense subsidies.

The three separate PHH Mortgage class action lawsuits were consolidated into a single action in December 2016. Following several months of mediation sessions, the parties agreed in principle to the current PHH Mortgage class action settlement in November 2016. The court granted preliminary approval of the settlement in February 2017.

Under terms of the PHH Mortgage class action settlement, qualifying persons who were charged premiums under a PHH Mortgage lender-placed insurance policy will be entitled to benefits. Those who paid premiums under the policies at issue will receive a cash payment, and those who made no payments on the premiums charged may receive an escrow account credit.

Who’s Eligible

For purposes of this settlement, Class Members eligible for benefits include all U.S. borrowers who between Jan. 1, 2006 and July 31, 2015 were charged by PHH Mortgage under a hazard, flood, flood gap, or wind-only lender-placed insurance policy for a residential property.

Potential Award

Varies.

Under terms of the PHH Mortgage class action settlement, qualifying persons who were charged premiums under a PHH Mortgage lender-placed insurance policy will be entitled to benefits worth 11.5 percent or six percent of the net premium they were charged between Jan. 1, 2006 and July 31, 2015.

Class Members who paid some or all of the premiums charged will receive a cash payment. Those who did not pay any premium may receive an escrow account credit, in lieu of payment via check.

Proof of Purchase

Class Members who paid some or all of the premiums in question may need to submit a signed statement by a witness, a copy of a photo ID, a copy of a PHH mortgage statement, or a notary verification, in addition to the Claim Form.

Claim Form

CLICK HERE TO FILE A CLAIM »

Claim Form Deadline

10/27/2017

Case Name

In re: PHH Lender Placed Insurance Litigation, Case No. 1:12-cv-01117, in the U.S. District Court for the District of New Jersey

Final Hearing

7/27/2017

Settlement Website

www.PHHLenderInsuranceSettlementInfo.com

Claims Administrator

Gallo/Finch/Burroughs Settlement Center
c/o JND Legal Administration
PO Box 6878
Broomfield, CO 80021
1-844-702-7326

Class Counsel

Peter A. Muhic
KESSLER TOPAZ MELTZER & CHECK LLP

Adam M. Moskowitz
KOZYAK TROPIN & THROCKMORTON LLP

Lance A. Harke
HARKE CLASBY & BUSHMAN LLP

Defense Counsel

Counsel for PHH Mortgage:
Bruce E. Alexander
WEINER BRODSKY KIDER PC

Counsel for Assurant:
Frank G. Burt
CARLTON FIELDS JORDEN BURT PA