Homeward Residential (AHMSI), QBE Insurance Corporation and WL Ross & Co. Face Amended Class Action Lawsuit over Mortgage Escrow Charges for Force-Placed Hazard Insurance

Amended Claims allege that QBE gave Homeward secret premium rebates or kickbacks, but homeowners fraudulently were charged for reimbursement based on the full premiums

NEW YORK--()--An amended complaint has been filed in a class action lawsuit against the mortgage servicing firm Homeward Residential, the insurer QBE Insurance Corporation, the private equity firm WL Ross & Co., and certain of their affiliates in connection with an allegedly unlawful scheme to recoup overstated disbursements for force-placed hazard insurance from homeowners. Prior to 2012, Homeward was known as American Home Mortgage Servicing, Inc. or AHMSI.

The amended complaint, filed by the law firm of Kirby McInerney LLP on March 8, 2016 in the United States District Court for the Southern District of Florida, alleges that QBE Insurance and its affiliates gave Homeward (AHMSI) secret premium rebates or kickbacks on its force-placed hazard insurance, but homeowners were nevertheless charged for reimbursement based on the full premiums – materially in excess of Homeward (AHMSI)’s true disbursements, which had been reduced by the rebates. The overstated force-placed hazard insurance charges were incorporated into homeowners’ monthly mortgage bills, and charged to homeowners’ mortgage escrow accounts.

Mortgages require borrowers to maintain insurance to protect the lender’s interest in the property. If the borrower’s insurance lapses, the mortgage entitles the lender to purchase force-placed hazard insurance and be reimbursed by the borrower for the cost.

Concealment of kickbacks

The lawsuit alleges that defendants fraudulently concealed the alleged secret rebates by laundering them through sham and collusive transactions, including: (i) $9.7 million paid to Homeward (AHMSI) as purported compensation for fictitious “marketing services”; (ii) the issuance of warrants on QBE stock worth $135 million directly to Homeward (AHMSI)’s shareholders, i.e., private equity funds managed by WL Ross; (iii) more than $16 million in phony “commissions” for nonexistent “brokerage” services purportedly provided by an affiliate of Homeward (AHMSI); and (iv) at least $25 million in below-cost, outsourced mortgage servicing services provided to Homeward (AHMSI) through an affiliate of QBE Insurance.

“Given the huge sums in secret rebates that were paid in this case, Homeward’s true force-placed hazard insurance costs were a fraction of what homeowners were charged,” stated Kirby McInerney LLP partner Mark Strauss. “Homeward had no right under the mortgages to recoup these excess amounts from borrowers.”

Nationwide class action lawsuit

The action, Parker et al. v. AHMSI Insurance Agency, Case 1:15-cv-23840-JEM (S.D. Fla.), is asserted on behalf of a nationwide class consisting of residential mortgage borrowers charged for force-placed hazard insurance in connection with loans serviced by Homeward (AHMSI) from July 1, 2008 through April 30, 2013. Claims are alleged under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961, et seq., and state law.

Homeward (AHMSI) is a subsidiary of Ocwen Financial Corporation (NYSE: OCN). QBE Insurance Corporation is part of QBE Insurance Group (ASX: QBE). WL Ross is an affiliate of Invesco Ltd. (NYSE: IVZ). Defendant AHMSI Insurance Agency Inc. (also known as Beltline Insurance Agency) was an affiliate of Homeward but is now owned by Altisource Portfolio Solutions S.A. (NasdaqGS: ASPS).

If you are homeowner or mortgage borrower who has been charged for force-placed insurance by Homeward (AHMSI) or any other mortgage servicer, and wish to discuss your rights, you may contact attorney Mark A. Strauss by email at mstrauss@kmllp.com, by telephone at (212) 371-6600, or toll free at (888) 529-4787. There is no cost or obligation to you.

About Kirby McInerney LLP

Kirby McInerney LLP is a New York-based law firm representing plaintiffs in securities, whistleblower, antitrust, and consumer litigation. The firm is committed to the aggressive pursuit of justice and to championing the rights of clients through class action lawsuits, arbitrations, and individual lawsuits. The firm has been profiled by Law360.com as one of the “Most Feared Plaintiffs’ Firms,” and named to The National Law Journal’s Plaintiffs’ Hot List. To learn more about Kirby McInerney LLP, please go to our website, http://www.kmllp.com/index.asp

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