Source: https://insuranceclaimsbadfaith.typepad.com/insurance_claims_badfaith/force-placed-insurance/page/2/
Timestamp: 2019-04-25 12:29:16+00:00

Document:
Once again the rush to judgment that is Rothstein v. Balboa Insurance Co., 794 F.3d 256 (2d Cir. 2015), has infected cases pending far from New York City where Rothstein was decided.
Speaking of a New York minute, within 24 hours after Lyons was decided, it was submitted to a trial judge in Florida as authority for the misunderstood filed rate doctrine in Lowe v. Loancare, Doc. No. 34-1, Exhibit A to Defendant American Security Insurance Company's Notice of Supplemental Authority filed February 3, 2016 (S.D. Fla. Case No. 1:15-cv-23700-KMM).
That does not give a judge enough time to read the decisions let alone make the decision.
Lender Force-placed Insurance Practices Held Part of Foreclosure Defense.
No "Lender Force-Placed Insurance Practices" Case Has Gone to Trial.
Recent statistics about Florida and Lender Force-Placed Insurance show that total U.S. premiums for LFPI were $3.5 Billion when total Florida premiums for LFPI were over 1/3 of that amount at $1.2 Billion.
Further, 35% of all LFPI policies were written in Florida.
There is every reason to think that Florida's role in the LFPI market has not changed much.
Source: Statistics stated for 2011.
Lee FINAL APPROVAL OF CLASS ACTION SETTLEMENT IS ON APPEAL.
The working machinery -- meaning everything we need to understand the issues -- presented by Ms. Margo Perryman's Opening Brief in her appeal to the Eleventh Circuit Court of Appeals is here: Download Perryman Appeal from Lee v Ocwen. Perryman Initial Brief.Filed 12.23.15 (11th Cir No 15-14630).
THE Lee FAIRNESS HEARING: NO SURRENDER. Part One.
Lee FINAL APPROVAL OF CLASS ACTION SETTLEMENT IN SOUTH FLORIDA.
Speaking of recovery of damages allegedly the result of lender force-placed insurance, a Magistrate Judge ordered his Final Approval of Class Action Settlement in a South Florida case followed here and on Insurance Claims and Issues blog, Lee v. Ocwen Loan Servicing, LLC, No. 14-CV-60649, 2015 WL 5449813 (S.D. Fla. September 14, 2015) (Goodman, USMJ). The publicly accessible order is here: Download Lee v Ocwen Loan Servicing.Order Final Approval Class Action Settlement.091415 (SD Fla No. 14.60649).. A person objecting to the settlement appealed after the Magistrate Judge overruled her objections and granted Final Approval to the Class Action Settlement. That appeal is pending under the case style Margo Perryman v. Ocwen Loan Servicing, appeal docketed, No. 15-14630 (11th Cir. October 14, 2015).
SETTLEMENTS HAVE NOT STOPPED LENDER FORCE-PLACED INSURANCE PRACTICES OR LAWSUITS.
BREACH OF CONTRACT ALLEGATIONS SUPPORT RECOVERY OF FORCE-PLACED INSURANCE COSTS.
I am continuing with my experiment taking Kevin O'Keefe's suggestion that short posts attract more conversation, and that people who read blogs are not looking to read articles. In particular, I want to see if this is good advice for popular posts on insurance coverage and bad faith issues here and on Insurance Claims and Issues blog.
The District Court in Maryland recently denied a motion to dismiss a breach of contract count where the plaintiff alleged in essence that he had already exhausted his administrative remedies. His homeowner's carrier cancelled his policy after he made a fire loss claim, then reinstated it after the mortgagee force-placed insurance on the homeowner and the homeowner filed a complaint about the homeowner's cancellation with the Maryland Insurance Administration (MIA). The homeowner's carrier then denied the claim after the policy was reinstated. "Although Nguti's insurance policy was reinstated after the MIA investigation, Nguti is seeking damages for the costs of the force-placed insurance coverage." Nguti v. Safeco Ins. Co., No. IDC-15-0742, 2016 WL 183521, at *4 (D. Md. opinion filed January 14, 2016).
Held: Mortgage Lenders Can Force Any Amount of Flood Insurance.
FILED RATE DOCTRINE IS A FARCE IN INSURANCE CASES.
Recent decisions in insurance cases have permitted the introduction of an affirmative defense as a reason for dismissal of a complaint. The decisions have come principally if not exclusively in lender force-placed insurance ("LFPI") cases. The arguments in these cases spotlight many of the reasons that the filed rate doctrine does not belong in insurance cases of any kind.
A recent illustration was previously commented on November 12, 2015: Trevathan v. Select Portfolio Servicing, Inc., No. 15-61175-CIV-DIMITROULEAS/SNOW, 2015 WL 6913144 (S.D. Fla. November 6, 2015). A few more comments are in order here.
It will be recalled that as posted here on November 12, the holding in this recent LFPI case was that since the premium "rate" charged by the insurance company defendant in that case for lender force-placed insurance was previously "filed" and approved by the Florida Office of Insurance Regulation ("OIR," the equivalent of a Florida Insurance Commissioner), then the filed rate doctrine applied and barred all of the plaintiff's claims involving "inflated premiums," i.e., premiums charged as part of a kickback scheme.
Not only is a carrier forbidden from charging rates other than as set out in its filed tariff, but customers are also charged with notice of the terms and rates set out in that filed tariff and may not bring an action against a carrier that would invalidate, alter or add to the terms of the filed tariff.
Evanns v. AT&T Corp., 229 F.3d 837, 840 (9th Cir.2000) (internal footnotes omitted).
Therefore, causes of action in which the plaintiff attempts to challenge the terms of a filed tariff are barred by the filed rate doctrine.
Hill v. Bellsouth Telecommunications, Inc., 364 F.3d 1308, 1315 (11th Cir. 2004). [Emphasis added.] It is clear under the cited authorities that the filed rate doctrine can only bar claims when the plaintiff making those claims is also the regulated utility's customer. This is not the case with LFPI claims. Even if some providers of insurance policies to lenders for forced placement may sometimes call homeowners their "customers," that is clearly not plausible. Lenders are the customers of insurance companies offering policies for forced placement by lenders, not homeowners.
Immediately after the observation cited by the District Court in this recent LFPI case that the filed rate doctrine operates to prevent discrimination among customers, the Eleventh Circuit made clear that this reference was to the protection afforded by the filed rate doctrine to prevent "carriers from negotiating a lower rate with some customers and then charging others the rate filed with the FCC." Hill v. Bellsouth Telecommunications, Inc., 364 F.3d 1308, 1316 (11th Cir. 2004). [Emphasis added.] No case is known in which any insurance carrier providing insurance for forced placement by lenders ever attempted to negotiate a lower rate with a homeowner for the premium placed on the homeowner by force.
Further, the District Judge in this recent LFPI case relied on "documents" attached to ASIC's motion to dismiss. In fact, the District Judge took judicial notice of them. The documents were a declaration with three exhibits. See them for yourself via PACER: Trevathan v. Select Portfolio Servicing, Inc., Docket No. 18-1, filed July 2, 2015 (S.D. Fla. Case No. 15-cv-61175). They total 17 pages inclusive of 4 pages of cover sheets with nothing but exhibit stickers on them. If this was the proof of ASIC's "filed rate doctrine" defense, it does not appear in the least to be legally sufficient.
Parenthetically, ASIC also filed a second declaration with exhibits on July 2, 2015. The District Judge in this recent LFPI case did not mention that one in his opinion. However, we will mention it in a future article most likely. You can access PACER in the meantime if you want to see this second declaration with exhibits filed on July 2, 2015 at Trevathan v. Select Portfolio Servicing, Inc., Docket No. 18-2, filed July 2, 2015 (S.D. Fla. Case No. 15-cv-61175).
Form OIR-B1-582, “Universal Standardized Data Letter,” as adopted in Rule 69O-170.015, F.A.C.
If there is no rate effect, a detailed explanation of how it was so determined or why it is believed that there is no rate effect.
For filings with a rate effect, an actuarial opinion and supporting memorandum prepared pursuant to Rule 69O-170.0135, F.A.C.
Manual pages formatted in compliance with Rule 69O-170.006(2), F.A.C. Subsequent to the initial filing, the insurer may defer submitting final amended manual pages until the Office concludes its analysis. Final approval will not occur until final manual pages have been submitted.
Be separated by line of business in accordance with Rule 69O-170.006, F.A.C.
(c) Group Filings. Insurers may submit a filing on behalf of any combination of insurers within the insurers' group, provided the effective dates are identical for every insurer and the program is identified in the filing.
But the documents filed with the Court in this recent LFPI case were brief. They did not constitute ASIC's rate filing by any stretch of the imagination. There was no rate filing for homeowner's insurance in the record of this case when the Court ruled that the "filed rate doctrine" applied in this recent LFPI case and there is no rate filing in the Electronic Court Record now either.
Unless the current "plausibility" standard to state a claim upon which relief can be granted in Federal Courts has somehow abolished the following rule, it had been the rule that in order to justify dismissal of a complaint based on an affirmative defense that application of the affirmative defense must appear from the face of the complaint. Assuming that that rule somehow survives, including in the U.S. District Court for the Southern District of Florida, it is difficult at best to see how the filed rate doctrine defense was made to appear from the face of the complaint in the Electronic Court File of this recent LFPI case.
Much more could be said. But the time has come to be content with one final observation here: Parties and Courts accepting the filed rate doctrine as a bar to any insurance-related claim are really saying that the Florida Office of Insurance Regulation approves premium rates that include the kickbacks alleged in LFPI cases including this one. The Florida OIR would certainly be surprised by that assertion.
That the filed rate argument is even raised and accepted in such cases says more perhaps about LFPI litigation than about the filed rate doctrine.
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements). For a special podcast of "Litigation and Prevention of Insurer Bad Faith" on the subject of Lender Force-Placed Insurance Practices, visit the West Legal Current Podcast here. All rights reserved.
LENDER FORCE PLACED INSURANCE: SEVENTH CIRCUIT REJECTED AND ELEVENTH CIRCUIT DISTINGUISHED IN NORTH FLORIDA.
LENDER FORCE PLACED INSURANCE: ANOTHER ELEVENTH CIRCUIT COURT "distinguishes" ALABAMA Feaz.
NEVADA COURT UPHOLDS SERVICER'S RIGHTS TO IMPOSE BACKDATED PREMIUM PENALTY.
This holding first appeared in July, 2015 in Nevada. A Federal Judge in a Nevada case held that Green Tree Servicing had the contract right under a homeowner's mortgage to place insurance premiums by force on a homeowner for periods of time when there was no insurance. Even though no recognizable insurance coverage could possibly be stretched backwards to cover those elapsed periods of time, yet Green Tree as the mortgage servicer could still force the homeowner to pay the premiums for those periods. It was so held in Morris v. Green Tree Servicing, LLC, No. 2:14-cv-01998-GMN-CWH, 2015 WL 4113212 (D. Nev. July 8, 2015).
This holding was concisely compared to previously settled principles of insurance law by Dennis J. Wall, "'Backdated' Insurance is Not Insurance At All. It is a Penalty," 37 Insurance Litigation Reporter 509 (November 20, 2015 issue). This article is ©2015 Thomson Reuters and posted with permission in accessible pdf on www.lenderforceplacedinsurance.com.
Now with a second opportunity to dismiss the plaintiff's claims, this time the Federal Judge dismissed 6 more of the plaintiff's claims with prejudice, in a more recent appearance of this case in Morris v. Green Tree Servicing, LLC, No. 2:14-cv-01998-GMN-CWH, 2015 WL 7573193, at *6 (D. Nev. November 25, 2015). The plaintiff's complaint is left with two (2) alleged claims for breach of contract and one (1) claim apiece for alleged "breach of the implied covenant of good faith and fair dealing" and "intentional misrepresentation."
It is not entirely clear after the latest iteration of Morris v. Green Tree Servicing whether the "backdated insurance" allegations are left to assist in stating one of the remaining claims, or whether these allegations are instead part of the dismissals with prejudice here. This time around the District Judge seemed to speak of them as surviving dismissal, but maybe not. See Morris v. Green Tree Servicing, LLC, No. 2:14-cv-01998-GMN-CWH, 2015 WL 7573193, at *3 (D. Nev. November 25, 2015).
HOMEOWNERS MUST PAY FORCE-PLACED KICKBACKS, BECAUSE REGULATOR "APPROVED" THEM.
The effect of the holding by a U.S. District Judge in South Florida is that regulators approved kickbacks as part of an insurance rate, and so homeowners must pay for the force-placed kickbacks as part of their insurance premiums.
The ruling came in the case of Trevathan v. Select Portfolio Servicing, Inc., No. 15-61175-CIV-DIMITROULEAS/SNOW, ___ F. Supp. 3d ___, 2015 WL 6913144 (S.D. Fla. November 6, 2015). In that case, the District Judge apparently did not find any claim he liked that was alleged in the plaintiff-homeowner's complaint because the District Judge granted all the defendants' motions to dismiss all the claims alleged.
The homeowner's claim based on the alleged kickbacks was dismissed with prejudice. The District Judge's ruling was based on the filed rate doctrine. In effect, the District Judge accepted the defendants' argument that since the insurance company among them filed for regulatory approval of a rate which all of the defendants say included kickbacks, that all the defendants thereby became immune from suit over the kickbacks and the homeowner in this case must pay for force-placed kickbacks because the Florida Office of Insurance Regulation approved the kickbacks, the Judge ruled. Trevathan v. Select Portfolio Servicing, Inc., No. 15-61175-CIV-DIMITROULEAS/SNOW, ___ F. Supp. 3d ___, 2015 WL 6913144, at *2 - *3 (S.D. Fla. November 6, 2015).
The District Judge in part based his ruling in this regard on the discredited Rothstein decision of a Second Circuit panel in July. See Dennis J. Wall, "Force-Placed Insurance / Filed Rate Doctrine Imported From Utilities Regulation to Insurance Law / Second Circuit Court of Appeals Panel Applies Doctrine to Texas, New Hampshire, and New York Lender Force-Placed Insurance Practices / Rothstein v. Balboa Insurance Co., 794 F.3d 256 (2d Cir. 2015), 37 Insurance Litigation Reporter 435 (October 6, 2015). A reprint of this publication © Thomson Reuters, reprinted with permission, is available at www.lenderforceplacedinsurance.com.
Image © by Shutter_M. Image provided by Shutterstock.
Green Tree's reliance on Feaz is, again, unpersuasive. Feaz dealt with a claim of breach under fiduciary duty under Alabama law which, unlike Florida law, does not contain an exception for “special circumstances” that create a fiduciary relationship that would not otherwise exist.
A related holding in the Edwards decision is commented on, in an article which was published on Insurance Claims and Issues Blog on Monday, November 9, 2015.
AFTER TRIAL ON LENDER FORCE-PLACED INSURANCE PRACTICES, PUNITIVE DAMAGES.
Image ©2015 by Dennis J. Wall. All rights reserved.
A lender force-placed insurance ("LFPI") case went to trial. And the evidence introduced at trial has just been reported, a lot of it. There have been many LFPI cases, but until recently most have ended in secret settlements and none has been found which ended in a trial.
Based on the evidence in this "wrongful foreclosure" action that did go to trial, a State Court Trial Judge entered judgment for the mortgagor's estate and assessed punitive damages. On appeal, the State Court of Appeals affirmed in part and reversed in part. When it affirmed, the appellate court affirmed multiple grounds for the trial court's holdings of liability and assessment of punitive damages. Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 2015-NMCA-096 (N.M. Ct. App. 2015).
Lender force-placed insurance practices are ordinarily challenged in Federal Court actions. Not one of those challenges has ended with a trial. The Dollens case may very well present a viable way not only to publicly air out practices which affect the public, but also to provide incentive for attorneys to litigate cases in which the prospect of success does not always mean settlement. Instead, the prospects of success in LFPI cases now can mean awards of general damages and assessments of punitive damages in favor of homeowners-mortgagors who have proven lender misconduct and resulting damages.
In Dollens, the parties stipulated that general damages amounted to $4,221.73. Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 535 n.2, 2015-NMCA-096 (N.M. Ct. App. 2015). This amount apparently reflects the amount due on the decedent's mortgage which the evidence shows was misapplied by the defendant mortgage servicer. In basic terms, the evidence also displayed that the actions of the mortgage servicer dealing with the money were the predicate cause of the decedent's mortgage loan going into default. Upon default, the mortgage servicer foreclosed on the decedent's property. Here is what the evidence shows according to the appellate court in Dollens.
The evidence shows that the mortgage servicer had two (2) opportunities to bring the mortgage due, and that it declined the opportunity on both occasions because it paid itself before it applied the payments according to the priorities set forth in the mortgage. The first occasion was when Minnesota Life Insurance Company paid the mortgage servicer the proceeds of a mortgage accidental death (or "MADD") insurance policy in the amount of $133,559.15. The mortgage servicer acted as the insurance company's "agent" to sell the MADD policy to the decedent. The servicer pocketed the "agent fees" paid by the insurance company. Parenthetically, in the parlance of LFPI cases, "fees" of this kind are alleged "kickbacks."
Further, in Dollens, instead of applying the insurance proceeds to reduce the principal balance as the mortgage required it to do, the mortgage servicer paid itself late fees, inspection charges, and bills for charges supposedly incurred for preservation of the property.
Parenthetically, the evidence clearly shows that before Minnesota Life paid the MADD proceeds to the mortgage servicer, Minnesota Life -- in a communication from the principal to its agent -- begged the mortgage servicer not to foreclose.
The evidence also clearly shows that the servicer filed for foreclosure six days after Minnesota Life asked it to hold off on filing foreclosure proceedings.
Inexplicably, in the eyes of the appellate court, the evidence does not reflect any other response by the agent to its principal, i.e., by the mortgage servicer to the insurance company.
The second time was just like the first, which came about when the decedent's estate brought the loan current four-and-one-half months later. Again, the mortgage servicer paid itself late fees and property inspection fees, and left more due on the loan than would have been the case if the payment had been applied following the priorities established in the mortgage for the mortgage servicer to follow, and which, the evidence showed, for a second time it did not follow. Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 535, 2015-NMCA-096 (N.M. Ct. App. 2015).
The Estate presented evidence at trial that Wells Fargo made excessive “drive-by” visits to the property, charging the mortgage account for each visit, and also charging for dubious preservation work orders, including orders for “winterization” in July, and multiple orders for “grass cuts” where photographic evidence presented at trial demonstrated that there was no grass.
Dollens v. Wells Fargo Bank, N.A., 356 P.3d 531, 545 ¶ 40, 2015-NMCA-096 (N.M. Ct. App. 2015).
There is more to the Dollens opinion on appeal, and readers will profit from reading it in its entirety. What has been shown here is enough to show the benefits of evidence and a record in lender force-placed insurance cases.
FEDERAL NATION-WIDE CLASS APPROVED FOR PENNSYLVANIA SETTLEMENT, MAKING 100%.
The case of Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090 (W.D. Pa. September 30, 2015) was filed as a class action. The named plaintiffs alleged claims arising out of lender force-placed insurance practices ("LFPI"), in this case, arising out of lender force-placed flood insurance practices. The plaintiffs alleged several claims, including alleged bad faith, as is typical in such cases. See Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090, *4 (W.D. Pa. September 30, 2015).
The parties' discovery was "significant," their lawyers said, and also they relied on "over 200,000 pages of documents produced" in another LFPI case. Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090, *4 (W.D. Pa. September 30, 2015).
After this activity, the case settled. The plaintiffs' lawyers and the defendants' lawyers stipulated that a class should be certified for settlement and the case settled accordingly. After citing to many factors for approval of the stipulation, the District Judge approved the settlement. Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090 (W.D. Pa. September 30, 2015).
This makes 100% of the lender force-placed insurance practice cases which have not gone to trial. To say the same thing in other words, no lender force-placed insurance practices case has been located which has ever gone to trial.
Perhaps for that reason, objections to the settlement were not, the District Judge pointed out, supported by "any controlling authority." Jackson v. Wells Fargo Bank, N.A., No. 2:12v1262, 2015 WL 5732090, *16 (W.D. Pa. September 30, 2015).
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All Rights Reserved. No Claim to Original U.S. Government Works.
FURTHER RE: WHEN IS ISSUE "ACTUALLY LITIGATED" EARLIER, PRECLUDED LATER?
This expands a previous article titled "WHEN IS AN ISSUE 'ACTUALLY LITIGATED' EARLIER AND PRECLUDED LATER?" The earlier article was actually litigated on Insurance Claims and Issues Blog, you might say.
However, this further issue was not actually litigated in the earlier article. It is this settled rule of law: "The party asserting preclusion bears the burden to prove all the necessary elements." Continental Western Insurance Co. v. Federal Housing Finance Agency, ___ F. Supp. 3d ___, 2015 WL 428342, *4 (S.D. Iowa Feb. 3, 2015).
Therefore this is an open issue here, and it updates and enhances the article posted here on September 1, 2015 titled, "A LITTLE EXCESSIVE SETTLEMENT JURISDICTION NEVER HURT ANYBODY?"
And why is the defendant in that other case seemingly freed from the burden of pleading and proving its own affirmative defense of issue or claim preclusion, or of res judicata?
Especially when the party asserting preclusion bears the burden to prove all the necessary elements? What reason is there to deliberately enter an order contrary to settled law, simply because the parties "stipulated" what they say shall be the law?
And last but not at all least: If unexamined stipulations drive adjudications, what drives employment for judges?
Please Read The Disclaimer. Copyright 2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). Listen to the author's most recent Thomson Reuters Legal Current podcast. All Rights Reserved. No Claim to Original U.S. Government Works.
WHEN IS AN ISSUE "ACTUALLY LITIGATED" EARLIER AND PRECLUDED LATER?
A LITTLE EXCESSIVE SETTLEMENT JURISDICTION NEVER HURT ANYBODY?
It is perfunctory for Courts approving settlements to write about the strength of the parties' positions and the risks of litigation, while generally ignoring such things as whether class action status could be maintained until judgment, and particularly turning a blind eye to the amount of discovery taken in the given case before the settlement. Such was the case earlier this year for example in Ellsworth v. U.S. Bank, N.A., 2015 WL 1883911, *3-*4 (N.D. Cal. April 23, 2015)(Beeler, USMJ).
1. All members of the classes including named Plaintiffs are hereby preliminarily enjoined from directly or indirectly: (i) filing, commencing, prosecuting, intervening in, or participating in (as class members or otherwise), any other lawsuit in any jurisdiction asserting the Released Claims; and (ii) organizing class members, or soliciting the participation of class members, in a separate class for purposes of pursuing any other action (including by seeking to amend a pending complaint to include class allegations, or seeking class certification in a pending action in any jurisdiction) based on or relating to any of the Released Claims. This injunction applies to all members of the classes as of the date of this order and will continue in full force and effect until the court issues a Final Approval Order and Judgment unless a class member properly and timely excludes himself or herself from the Settlement, at which time he or she will no longer be considered a class member and will no longer be subject to the Preliminary Injunction.
Ellsworth v. U.S. Bank, N.A., 2015 WL 1883911, *6 (N.D. Cal. April 23, 2015)(Beeler, USMJ).
And who shall determine whether a given person is asserting a "Released Claim" in another case?
How does any Court in any case have jurisdiction to suspend the Rules of Civil Procedure in any litigation let alone in "any other action"?
These and similar questions arise from language like this, usually adopted by judges and magistrates from pleadings filed by the parties. These questions deserve to be addresssed.
NEW HOUSING UP, EXISTING HOUSING SALES UP, OWNERSHIP NOT UP.
New construction is on the rise, and the number of new houses being built and sold is up. "Markets Rebound on Builder Optimism" p. B2, col. 4 (Associated Press report published in New York Times Nat'l ed., "Business Day" Section, Tuesday, August 18, 2015), published online under the headline "Wall St. Closes Up After Early Losses."
Existing house sales are up to a level not seen since the Great Recession began. "Sales of Existing Homes Hit Pace Last Seen in 2007" p. B2, col. 3 (Reuters report published in New York Times Nat'l ed., "Business Day" Section, Friday, August 21, 2015).
However, markets have not exactly "rebounded". The market looks very different today. Hedge funds and other investors are the ones who are buying houses and renting them to people. Based on past experience, many investors will find many ways for their investments to provide them with returns, particularly since the investors will not be the ones dwellling in the houses.
Hon. Christy L. Romero, Special Inspector General of the Troubled Asset Relief Program, quoted in Gretchen Morgenson, “Fair Game / Slack Lifeline for Drowning Homeowners,” p. 1, col. 1 (New York Times Nat’l ed., “SundayBusiness” Section, Sunday, August 2, 2015).
To keep money flowing through as great a number of hands as possible, and to keep homeowners in their homes, loan modifications – “deals that reduce the costs of mortgages” -- became a popular potential solution to a large part of the Great Recession, which was caused in large part by practices involved in mortgage lending. Loan modifications thus became central to the Obama Administration’s Home Affordable Modification Program or “HAMP,” which was supposed to affect Four Million homeowners and the lenders and servicers that deal with their mortgages.
In an investigative report issued last week, the Office of the Special Inspector General of the Troubled Asset Relief Program (“SIGTARP”) found that banks participating in HAMP rejected 72% of the applications for loan modifications. After some 6 years, the banks have agreed to loan modifications for 887,001 mortgagors-borrowers, not 4,000,000.
SIGTARP reported two big reasons for these results: HAMP is entirely voluntary for banks, and the banks which do participate are “on their own,” without any supervision or accountability.
Delaying a borrower’s loan modification request can be profitable for a bank; extra time for the bank means more interest and fees can be charged to the borrower, increasing the amount owed on the mortgage.
Gretchen Morgenson, “A Slack Lifeline for Homeowners,” New York Times, supra.
Instead of affordable modifications, banks are delivering more predatory practices, enabled instead of policed by the Federal Government. The business model of robbing the poor to give to the rich is very much alive.
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of “Lender Force-Placed Insurance Practices” (American Bar Association 2015). All Rights Reserved.
The ones who pay are the only ones who have no say.
Image Copyright 2015 by Dennis J. Wall.
"No matter whom you deal with for the mechanics of your mortgage, in other words, the rate you pay is ultimately set by asset managers, hedge funds, pension funds, sovereign wealth funds and countless other players who are buying and selling securities in hopes of getting the best deal." Neil Irwin, "Forget About Market Timing," p.11, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, July 19, 2015), published online under the title of "Thinking About Taking Out a Mortgage? Don't Obsess Over the Fed," posted on July 16, 2015.
When mortgages return from being viewed as securities to being treated by banks and insurance companies as collateralized loans that are paid back, mortgages will become easier to deal in, and to deal with.
See and hear our initial effort at bringing the sights and sounds of Lender Force-Placed Insurance Practices to life on this YouTube video.
Please Read The Disclaimer. Copyright 2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All Rights Reserved.
AS CALIFORNIA GOES ON BORROWER’S STANDING TO CHALLENGE DEFECTIVELY ASSIGNED NOTE ….
SO GOES MOST OF THE NATION ON DEFENSES TO WRONGFUL FORECLOSURE.
In a case called Yvanova, the Supreme Court of California granted review in a case involving standing to raise the issue of a defective assignment of a note and deed of trust as a defense in a wrongful foreclosure action. Depending on how the California Court answers that question, the wrong plaintiff may be pursuing that foreclosure action.
The Supreme Court granted review in Yvanova almost a year ago. It seems like that was very long ago to some people, so long that they have apparently forgotten what the California high Court’s review is about. To some degree, it may be the California Supreme Court’s own fault, letting the case lie untouched to human eyes for nearly a year, but that happens in law and not just in the California Supreme Court.
At any rate, several commentators have recently observed that the California Supreme Court was considering a homeowner’s standing to raise the issue of wrongful foreclosure – period.
Briefing and argument is limited to the following issue (see Cal. Rules of Court, rule 8.516(a)(1)): In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void?
Yvanova v. New Century Mort. Corp., 331 P.3d 1275, 176 Cal. Rptr. 3d 266, 266 (Cal. August 27, 2014).
The issue accepted for review by the Supreme Court is an important one. The Supreme Court’s answer will affect the resolution of many wrongful foreclosure actions, and not just actions in California as the Courts of other States and jurisdictions follow or even distinguish and reject the Californians’ lead.
But it is totally not the same issue as whether a homeowner has standing to raise the issue of, i.e., file a claim for, wrongful foreclosure – period.
This is the third part of an article, which continues from the second part of the same article which was published on Insurance Claims and Issues blog on Wednesday, June 17, 2015.
The third of the three noteworthy rulings of Judge Jonathan Goodman that we are looking at in the Lee case, came “off the books,” so to speak. The ruling is reflected only in a paperless order entered on the electronic docket. It deserves to be published.
And so, it is published here, in its entirety. For those who are not fortunate enough to have easy access to the electronic docket of the Federal Courts, PACER or Public Access to Court Electronic Records, here is a copy which you can download, view and print from your own computer archives: Download Lee v Ocwen Loan Servicing.Supplemental Paperless Order. Dkt 160. 06.12.15 (S.D. Fla. Case No. 0.14.cv.60649).
ENDORSED ORDER re Supplement to Post Fairness Hearing Order 159 . Plaintiffs shall order the full transcript of yesterday's fairness hearing and arrange for the court reporter transcribing the hearing to upload it on CM/ECF by June 29, 2015 (so that the attorneys preparing the proposed orders on the motion to approve the settlement agreement will be able to use the transcript and, if they deem it necessary or helpful, to use pinpoint page references from the transcript).
In addition, Plaintiffs, Defendants and the Objectors (i.e., the Valdezes) who will be filing proposed orders shall also file a list of all cases (both appellate and trial level) from April 1, 2012 to the present, in which courts have approved settlements in lender-placed insurance cases, rejected settlements in lender-placed insurance cases, and/or ruled on motions to dismiss or for summary judgment, in whole or in part, in lender-placed insurance cases.
The lists shall include both class action lawsuits and individual lawsuits and shall include cases which have been officially published (e.g., in Fed. 3d., Fed. Supp. 3d or F.R.D.), unofficially published (e.g., only in Westlaw or Lexis) or not published at all (i.e., listed only on a court's CM/ECF docket sheet). The list shall include all cases that counsel are aware of, either because they participated in the case or because they are familiar with developments in lender-placed insurance cases.
This order does not require any party or their counsel to conduct independent legal research to track down all cases which have been entered since April 1, 2012. But based on the citation-filled memoranda filed to date, the Undersigned is aware that counsel are well-versed with recent developments in lender-placed insurance litigation and are relatively up to speed on most, if not all, significant court decisions.
Next to each case name and number, the party submitting the list shall provide a brief, one-sentence summary of what happened in the ruling (e.g., [a] district court approved settlement, [b] district court rejected settlement, [c] a district court dismissed without prejudice the RICO counts, dismissed with prejudice the breach of contract count, and upheld the breach of fiduciary duty and statutory unfair practices counts, and/or [d] a district court denied a dismissal motion but noted that a claim was problematic and suggested it might not survive summary judgment).
A few things to emphasize in this unusual ruling. At the beginning, the context is crucial. Judge Goodman already gave preliminary approval to the class settlement in Lee. The Court’s final approval was supposed to be a done deal, a slam dunk. Until it wasn’t.
First, note in this paperless ruling that the Court is ordering the parties to order the transcript of the Fairness Hearing so that everyone involved in the case – Court, litigants, counsel, everyone – can see and reference the arguments and rulings. Yes, the transcript will be of great help to the lawyers preparing the proposed orders which this Judge required in a previous ruling. In the process, however, everyone involved in the Lee case – and anyone in the vast world outside of the Lee case, as well – can see for themselves the arguments and the rulings that were made in the context in which they were made.
Second, the Court is ordering everyone – plaintiffs, defendants, and persons registering objections to final approval of the class settlement – to provide a list of known lender force-placed insurance cases and the specific dispositions of those cases according to a matrix, if you will, that matches the boundaries within which this Court will decide those issues in this particular case, too.
Third, the deadlines for the lists to be provided are staggered, meaning that each person providing a list may have a different deadline to meet than other persons who are also required to provide a list of cases. The last deadline is July 9, 2015.
It does not take a genius, as they say, to guess that a ruling on the final approval request can be expected in Lee after July 9, 2015.
So stay tuned. Watch this space. The Lee ruling on the final approval of class settlement issues will be posted here as soon as the ruling is released on the public docket.
MUTUAL FUNDS’ FIDUCIARY ISSUES FOR INVESTORS, INVESTMENTS.
Two of the larger mutual funds, Fidelity and Vanguard, reportedly vote against proxy access for their investors as shareholders in the corporations in which the funds invest the shareholders’ money. Proxy access is shorthand for shareholders having the opportunity to nominate directors.
Fidelity in particular confirmed to a reporter through a spokesperson that its policy against having its investors nominate directors is so entrenched, that it opposes shareholder access even when shareholder access is supported by a given company’s management. Gretchen Morgenson, “Fair Game / The Giants That Keep Insiders In,” p. 1, col. 4 (New York Times Nat’l ed., “SundayBusiness” Section, Sunday, May 31, 2015).
Institutions that vote against proxy access, some investors say, are preserving the status quo in corporate boardrooms, where there is little accountability on outsize executive pay, director diversity and other governance issues. And such a position is even more troubling when it is taken by an institution that has a fiduciary duty to do the right thing by its investors.
How is it in the interest of your investors to deny them the opportunity to nominate directors in the corporations in which you invest their money?
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of “Lender Force-Placed Insurance Practices” (American Bar Association 2015). Mutual funds purchase commercial paper of all kinds including mortgage loans. Fiduciary claims are among the claims usually alleged in forced placement practices cases involving mortgage loans.
Insurance Force-Placed For, By Lenders: National Practices, National Reporting.
Kenneth Harney: Lapse in paying home insurance risks gouging - The Columbus Dispatch 05.10.15.
Allegedly abusive property insurance deals lead to class action settlement, reported by Kenneth R. Harney, Washington Post, May 6, 2015.
Image of Foreclosed House For Sale provided by Shutterstock.
Please Read The Disclaimer. Blog post text copyright 2015 by Dennis J. Wall. All Rights Reserved.
The Same, Only Different: Predatory Mortgage Lending, Predatory Auto Lending.
As Plaintiff observes in response to the Green Tree Defendants' Motion, this Court has often found that a plaintiff has properly stated a claim for tortious interference with a business relationship in cases alleging wrongful force-placement of insurance.
Burdick v. Bank of Am., N.A., ___ F. Supp. 3d ___, 2015 WL 1780982 *5 (S.D. Fla. April 14, 2015).
This case is not meaningfully different. Here, in the light most favorable to Plaintiff, the Amended Complaint alleges that Defendants Green Tree Servicing and Green Tree Insurance conspired in bad faith to improperly force-place insurance on Plaintiff's property, and that this conduct interfered with the relationship between Plaintiff and the holder of his mortgage.
Please Read The Disclaimer. Copyright 2015 by Dennis J. Wall. All Rights Reserved. No Claim to Original U.S. Government Works.
"At Long Last, Have You No Shame?"
KICKBACKS INDIRECTLY RECEIVED ARE STILL UNJUST UNDER FLORIDA LAW, COURTS HOLD.
The Florida law of unjust enrichment requires that the plaintiff conferred a “direct benefit” on the defendant. In particular, “insurance agencies” set up by lenders and mortgage servicers often attempt to avoid unjust enrichment claims by arguing that the plaintiffs did not pay the alleged “unauthorized kickbacks” directly to them. Such was the case, for example, in Longest v. Green Tree Servicing LLC, No. 2:14-cv-08150-CAS (RZx), 2015 WL 546005 (C.D. Cal. February 9, 2015).
In the Longest case, the Court applied Florida law and denied the defendants’ motion to dismiss the Florida unjust enrichment claims at bar. The fact that the plaintiffs’ payments passed through a third party conduit on their way to the defendants did not prevent the plaintiffs from pursuing their unjust enrichment claims against the defendants under Florida law. Longest v. Green Tree Servicing LLC, No. 2:14-cv-08150-CAS (RZx), 2015 WL 546005, *10 (C.D. Cal. February 9, 2015).
CALL ME “LENDER FORCE-PLACED INSURANCE,” BECAUSE THAT’S WHAT I AM.
The U.S.Code defines LPI [what the Magistrate said means “Lender-Placed Insurance”] as “hazard insurance coverage obtained by a servicer of a federally related mortgage when the borrower has failed to maintain or renew hazard insurance on such property as required of the borrower under the terms of the mortgage .” 12 U.S.C. § 2605(k)(2).
The cited statute, a part of the Real Estate Settlement Procedures Act (“RESPA”), defines instead “Force-Placed Insurance”. And for purposes of the statute.
The reality is that it is “lender force-placed insurance” because that’s what it is. It is insurance force-placed by and for lenders.

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 § 2605