MGIC settles mortgage insurance lawsuit for $17.6 million
MGIC Investment Corp., the parent company of private mortgage insurer Mortgage Guaranty Insurance Corp. (MGIC), has settled several class action lawsuits for an estimated $17.6 million.
The lawsuit alleges that MGIC and two other insurers provided illegal kickbacks.
The settlement provides for payments of $38.60 each for policyholders nationwide who purchased MGIC policies between May 19, 1997, and Nov. 30, 2000. MGIC will spend the next 30 to 60 days identifying which policies and lenders are affected by the settlement, and does not have an estimate of how many will receive compensation.
The lawsuits filed in U.S. District Court in Augusta, Ga., allege that MGIC and two other insurers, PMI Mortgage Insurance Co. and United Guaranty Residential Insurance Co., provided illegal kickbacks to mortgage lenders in exchange for customer referrals for private mortgage insurance.
The mortgage insurers allegedly provided lenders with services at below market price, including mortgage reinsurance, contract underwriting, and agency pool insurance, which safeguards loans made by mortgage companies. Kickbacks violate the federal Real Estate Settlement Procedures Act of 1974 (RESPA).
MGIC denies any wrongdoing in the case.