In many lender force-placed insurance cases, lenders and mortgage servicers argue that they “disclosed” their unearned commissions, and that as a result homeowners cannot sue them for breach of the mortgage contracts. This argument was addressed in the case of Longest v. Green Tree Servicing LLC, No. 2:14-cv-08150-CAS (RZx), 2015 WL 546095, *4-*5 (C.D. Cal. February 9, 2015).
The Court rejected this argument in that case, following a long line of holdings in similar cases. Just because the contract documents may have authorized the defendants to force-place insurance does not mean that the contract documents authorized the defendants to force-place charges for “unauthorized kickbacks” as a part of the insurance premiums. [Emphasis added.]
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