Esp Fidelity Corporation v. Department of Housing and Urban Development

BARNES, Senior Circuit Judge: Appellant ESP Fidelity Corporation sells “ESP”, which stands for Economic Security Program. ESP Fidelity’s executive vice-president, Laurence August (an ex public relations counselor), and apparent developer of this program, euphemistically terms “ESP” a “consumer protection program.” In reality and substance, “ESP” is nothing more than a program of mortgage unemployment insurance. (See C.T. 306 — 307; cf. Plaintiff’s Ex. 1, pp. 40, 41, 47, 49, 53-55, 62, 73).

The “ESP” plan works in the following manner: ESP Fidelity, on behalf of the builder, obtains a master insurance policy, issued by Reserve Insurance Company. The builder in turn delivers to the home buyer an “ESP” certificate containing paraphrased terms of the master policy. Under a typical master policy, the original lender financing the purchase of the home is entitled to receive a maximum of six monthly home payments should the home buyer become involuntarily unemployed during the first three years of home ownership. Benefits become payable after 30 days of consecutive unemployment. The “ESP” certificate recites that the builder is to make the six monthly payments, although in fact…