The combined settlement will benefit more than a million homeowners nationwide who were saddled with Lender insurance at allegedly inflated rates.
As big as the combined settlement is, it’s a drop in the bucket - especially in the Sunshine State, where no fewer than 14 Force-Place Insurance class-action lawsuits have been filed in the Southern District of Florida. Those settlements, according to the report, combined to a total of $2 billion, benefiting upwards of 4 million homeowners.
Ocwen and Nationstar are two of the largest mortgage servicing entities in the United States.
The practice of Force-Place Insurance is a legitimate process, providing the capacity for mortgage holders to push insurance coverage onto mortgaged properties that are found to have insurance coverage considered inadequate or lacking altogether. The problem, according to plaintiffs embroiled in many a Force-placed insurance lawsuit, is that Lender insurance (sometimes called creditor-placed insurance) has been found to be more costly than standard policies, with less coverage.
While the creditor is placing the lenders insurance against the mortgaged property to protect the investment against catastrophic loss, the actual legal owner of the property is stuck with paying what is often a grossly inflated rate.
The report in the Daily Business Review noted that in some cases, insurers paid commissions to lenders of up to 25 percent in exchange for the business. Those costs, it is alleged, were passed along to homeowners already struggling with the collapse of real estate values in the midst of a bursting housing bubble.
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Ocwen has been down this Force-placed insurance lawsuit road before. The company previously reached a $150 million settlement with New York state over accusations of improper servicing practices, the issuance of allegedly excessive charges and other practices that overburdened homeowners with excessive forced-placed insurance terms while already in distress due to plunging real estate values.
Case information was not available at press time.