Nationstar Settles for $77 Million Over ‘Force Placed Insurance’

Nationstar Mortgage has agreed to pay $77 million to settle class-action suits filed by homeowners over the alleged inflating of homeowner insurance rates, according to media reports.

The class action suits claim the insurance policies were automatically issued to homeowners at rates approved by lenders, which were much higher than market rates. Homeowners claim they did not have a choice in the matter, hence the term “force placed insurance.” Lenders call the practice “creditor-placed insurance.” According to the homeowners, lenders made as much as 25 percent commission from the insurers in some cases while homeowners struggled to pay the bill for the inflated insurance premiums during the financial crisis.

U.S. Magistrate Judge Jonathan Goodman of the U.S. District Court for the Southern District of Florida (in Miami) approved the Nationstar settlement on Monday, November 10.