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Riddled with countless financial setbacks, Ocwen was dealt another heavy blow with a $140 million class action settlement that must be paid by both Ocwen and Assurant Inc. to homeowners who were given inflated premiums for force-placed insurance.
The lawsuit, filed in March 2014 by plaintiff Jennifer Lee, alleged that Ocwen inflated premiums in exchange for kickbacks from Assurant—an insurance company that specializes in multiple types of insurance, including property.
The force-placed insurance includes wind, hazard, flood, and flood-gap insurance coverage that was applied to Ocwen borrowers that lacked sufficient insurance.
Lee’s lawsuit also cited “breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichments, breach of fiduciary duty, violations of Florida’s Deceptive and Unfair Trade Practices Act, tortious interference with a business relationship, and violations of the Racketeer Influenced and Corrupt Organizations Act…,” as part of the allegations.
Practices regarding Lender Placed Insurance with Assurant were investigated long before the March 2014 lawsuit. According to the settlement agreement, “Class Counsel has been investigating and litigating Lender Placed Insurance class cases against the Assurant Defendants in the Southern District of Florida for almost three years prior to filing the complaint in the Lee Litigation.”
Assurant recently announced in an April 28 press release that it will sell its employee benefits and health business segments in favor of focusing on niche housing and lifestyle protection. The strategic move will allow its Assurant Specialty Property segment to broaden its services involving, interestingly enough, lender-placed insurance.
Despite the payout, both Ocwen and Assurant admit to no wrongdoing. Rather, the companies have chosen to settle to prevent the expensive cost of prolonged litigation.