Fifth Third Bank and mortgage insurers sued over 'kickbacks'
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A Latrobe man and two Illinois homeowners sued Fifth Third Bank and six mortgage insurers Thursday, alleging the bank got "kickbacks" from the insurers in violation of the Real Estate Settlement Procedures Act.
The complaint in U.S. District Court describes itself as a "proposed nationwide action" on behalf of all borrowers who got mortgages from Cincinnati-based Fifth Third, with private mortgage insurance, beginning in 2004.
Christopher Manners, of Latrobe, and Jamie and Aimee Young, of Carbon Cliff, Ill., got mortgages from Fifth Third in 2007, according to the complaint.
Mr. Manners paid $166.80 per month for private mortgage insurance, and the Youngs paid $33.35 per month, according to the complaint.
Such insurance is typically required when borrowers make a down payment of less than 20 percent, and is arranged by the lender, according to the complaint.
Unknown to the borrowers, Fifth Third had arrangements with the insurers under which they bought "reinsurance" from the bank, according to the complaint.
Fifth Third from 2004 through 2011 got $54 million in reinsurance premium payments from the insurers, and only paid out $4.9 million in claims, according to the complaint.
"This scheme constitutes disguised, unlawful referral fees in violation of RESPA's anti-kickback provisions," according to the complaint.
Pittsburgh attorney Stephen J. O'Brien and lawyers from Radnor, Walnut Creek, Calif., and Chattanooga, Tenn. filed the complaint. Mr. O'Brien could not be immediately reached.
Fifth Third spokeswoman Barbara Grimsley could not be immediately reached for comment.
First Published April 6, 2012 10:52 am