Force-Placed Insurance Racket Alleged In Federal Suit Tagging GMAC, Notorious Provider w/ Charges Of Illegal Kickbacks That Screwed Homeowners

In New York City, the law firm Kirby McInerney LLP recently announced:

• The law firm of Kirby McInerney LLP has filed a class action lawsuit in the United States District Court for the Southern District of New York against GMAC Mortgage, LLC and Balboa Insurance Company in connection with an allegedly unlawful kickback scheme involving force-placed insurance.
  
  
• The case is brought on behalf of a putative class consisting of all residential mortgage borrowers who have been charged costs associated with force-placed insurance in connection with loans serviced by GMAC at any time from March 6, 2003 to the present. The case alleges that GMAC, a mortgage loan servicer, extracted kickbacks or bribes from Balboa, a provider of force-placed insurance coverage, which artificially inflated reimbursements sought by GMAC from borrowers.
  
  
• To protect the lenders' interest in secured property, mortgage loan contracts require the borrower to maintain specified levels of hazard insurance. If the borrower's coverage lapses, the lender is entitled to purchase coverage for the home, "force place" it, and be reimbursed by the borrower for the cost.
  
  
• Beginning in March 2003, GMAC entered into an agreement to buy force-placed insurance coverage with respect to its mortgage loan servicing portfolio from Balboa. Plaintiff alleges that GMAC, as a quid pro quo for awarding Balboa its force-placed insurance business, has required Balboa to pay GM kickbacks.
  
  
• These kickbacks have been in the form of bogus "commissions" paid to a GMAC affiliate, "GMAC Agency Marketing," an unincorporated division and/or fictitious "doing business as" name of defendant GMAC Insurance Marketing, Inc. Plaintiff alleges that Balboa agreed to label these payments as "commissions" -- and to funnel them through GMAC Agency Marketing -- to disguise their true nature as bribes or kickbacks.

For more, see Kirby McInerney LLP Files Class Action Lawsuit Against GMAC Mortgage Alleging an Illegal Kickback Scheme in Connection With Force-Placed Insurance on Borrowers' Homes.

For the lawsuit, see Rothstein v. GMAC Mortgage, LLC, et al.