COURT CERTIFIES CLASS OF HOME BORROWERS WHO HAD PRIVATE MORTGAGE INSURANCE REINSURED WITH LENDER’S CAPTIVE REINSURER
The US District Court for the Northern District of California has certified a nationwide class of persons who secured residential mortgage loans from Wells Fargo Bank, where the down payments were funded with borrowed funds subject to private mortgage insurance (“PMI”) with Wells Fargo as the beneficiary of the PMI, and the PMI was reinsured by Wells Fargo’s captive reinsurance company. The Complaint alleged violation of the federal Real Estate Settlement Procedures Act (“RESPA”) in that payments relating to the reinsurance amounted to illegal kickbacks. The court found that while the plaintiffs might not be able to maintain a claim that the amount paid for the insurance (and reinsurance) was excessive, claims that the payments amounted to illegal kickbacks under RESPA could be subject to class-wide treatment. Kay v. Wells Fargo & Co., Case No. C 07-01351 (USDC N.D. Cal. Nov. 30, 2007).
This post written by Rollie Goss.
