Caliber Home Loans, American Security Insurance sued over illegal kickback allegations

By Robbie Hargett | Dec 21, 2015

MIAMI (Legal Newsline) – Two Florida residents and a Pennsylvania resident are suing a mortgage servicing firm and an insurance company over allegedly taking unlawful kickbacks.

Richard L. Fowler, Glenda Keller and Yvonne Yambo-Gonzalez, individually and for all others similarly situated, filed a class-action lawsuit Dec. 10 in the U.S. District Court for the Southern District of Florida against Caliber Home Loans, individually and as successor-in-interest to Vericrest Financial and Caliber Funding, and American Security Insurance Co., alleging breach of contract, breach of good faith and fair dealing, unjust enrichment, tortious interference with a business relationship, violations of the Truth in Lending Act and violations of the Racketeer Influenced and Corrupt Organizations Act.

The suit states that Caliber, American Security, and its affiliates have had an arrangement for many years whereby American Security performs many of Caliber's mortgage-servicing functions and acts as exclusive provider of force-placed insurance coverage for homeowners with Caliber mortgage loans.

In exchange, American Security provides Caliber with various kickbacks, including unearned "commissions" and "expense reimbursements," that the two companies disguise as legitimate compensation, the suit states.

Essentially, the suit claims, Caliber receives a rebate on the cost of the force-placed insurance, but Caliber homeowners bear the cost of these kickbacks because the defendants do not pass these rebates on to the borrower. Instead, the charges for force-placed insurance are deducted from borrowers' escrow accounts.

Unsuspecting borrowers, including the plaintiffs and others in the class, are charged inflated amounts for force-placed insurance, then a considerable portion of that amount is kicked back to the lender or servicer, according to the suit.

The plaintiffs and others in the class seek an order enjoining the defendants from continuing these practices, plus damages, interests, attorney fees, and other costs of the suit.

They are represented by attorneys Adam M. Moskowitz, Thomas A. Tucker Ronzetti, Rachel Sullivan, and Robert J. Neary of Kozyak Tropin & Throckmorton in Coral Gables, Florida; by attorneys Aaron S. Podhurst, Peter Prieto, and Matthew Weinshall of Podhurst Orseck in Miami; by attorneys Lance A. Harke, Sarah Engel, and Howard M. Bushman of Harke Clasby & Bushman in Miami Shores, Florida; by attorney Archie C. Lamb Jr. of Archie Lamb, Associates in Birmingham, Alabama; and by attorneys Eric D. Holland and Randall Seth Crompton of Holland Groves Schneller & Stolze in St. Louis.

U.S. District Court for the Southern District of Florida Case number 1:15-CV-24542-JAL

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Organizations in this Story

American Security Insurance Co Archie Lamb, Associates Caliber Home Loans Harke Clasby & Bushman Holland, Groves, Schneller and Stolze LLC Kozyak Tropin & Throckmorton Podhurst Orseck, PA

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