Munoz

ORDER RE: MOTION ON THE PLEADINGS

I. History

Defendant PHH (which comprises a number of related companies with similar names, including PHH Corporation, PHH Mortgage Corporation, and PHH Home Loans, LLC) provides real estate mortgages nationwide. Defendant Atrium Insurance Corporation is a wholly owned subsidiary of PHH. Plaintiffs are individuals who obtained mortgages from PHH who provided down payments of less than 20% of the total purchase price of the homes. Those who purchase a home with less than a 20% down payment must generally purchase private mortgage insurance (“PMI”) to protect the lender against the risk of default. Borrowers in this situation pay not only their monthly mortgage payment but a monthly PMI premium as well. Plaintiffs allege PHH selected the specific PMI providers Plaintiffs used as part of the mortgage process. These PMI providers pooled the PMI contracts and reinsured with Atrium to spread the risk of default, giving Atrium a portion of the monthly PMI premiums. Plaintiffs allege that the reinsurance is a sham whereby Atrium took on little to no risk and functioned instead as a means of giving PHH a referral fee.

Plaintiffs filed suit in federal…