This lawsuit involves lender-placed insurance (“LPI”), which is insurance (hazard, flood, flood gap, or wind only) that is placed on a borrower’s property to protect the borrower and mortgage lender when the borrower’s insurance policy lapses, or when the borrower does not maintain a homeowner’s insurance policy that is acceptable to the mortgage lender. When an LPI Policy is placed pursuant to the borrower’s mortgage contract, Carrington pays premiums to the LPI insurer that issues the policy, in this case, one of the AMIG Defendants and/or SWBC, and then Carrington charges borrowers for those premiums.
Settling Plaintiffs brought claims on behalf of all persons in the Carrington Settlement Class (as defined in FAQ #5). Settling Plaintiffs allege that when a borrower was required to have insurance for his or her property pursuant to a residential mortgage or home equity loan or line of credit, and evidence of acceptable coverage was not provided (for example, when the insurance policy did not exist or had lapsed), Carrington would place insurance in a manner such that Carrington allegedly received an unauthorized benefit. Settling Plaintiffs allege further that Carrington did so primarily to receive “kickbacks” or other consideration from AMIG Defendants and/or SWBC. Settling Plaintiffs also allege that the way in which LPI policies were obtained and placed caused the charges to borrowers attributed to premiums and the amount of coverage to be excessive.
Carrington, AMIG Defendants, and SWBC expressly deny Settling Plaintiffs’ allegations and assert their actions were and are fully authorized under the mortgage instruments and by law. They also expressly deny that they did anything wrong. There has been no court decision on the merits of this case and no finding that Carrington, AMIG Defendants, or SWBC committed any wrongdoing.