WSJ-

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.

[WSJ]