Pmi Mortgage Ins Co v. American International
Opinion
Opinion
I. BACKGROUND
PMI is a large financial institution that sells, among other things, mortgage guaranty insurance to residential mortgage lenders who provide loans to homebuyers considered to be at risk of defaulting on their mortgages. This insurance covers a lender for losses incurred when a borrower defaults on the repayment of a mortgage loan and the collateral is not suffi- cient to make the lender whole. PMI also offers its lender cli- ents underwriting services, claims services, policy administration services, loan underwriting, loss mitigation, pool insurance and captive reinsurance.
In December 1999, a putative class of plaintiffs who had obtained mortgage insurance through PMI’s lender clients sued PMI in the Southern District of Georgia (The Baynham action). The Third Amended Class Complaint alleged that PMI was undercharging its lender clients for various insur- ance products and services in exchange for customer referrals on mortgage insurance. Since the lender clients had not passed these savings on to their customers, plaintiffs claimed that this scheme violated the anti-kickback provisions of the Real Estate Settlement Procedures Act (RESPA).