Frequently Asked Questions
- Am I being sued?
- What is the Action about?
- Why did I receive the Class Notice?
- What is the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq.?
- What is a Reinsured Loan?
- What is the difference between Private Mortgage Insurance (“PMI”) and Reinsurance?
- What is the amount of the Settlement?
- What amounts are being deducted from the Settlement Fund?
- Who is eligible to receive a Settlement Payment?
- How was my payment calculated?
- I didn’t file a claim. Can I do so now?
- I have more than one Reinsured Loan. How much will I receive?
- There is more than one borrower on my Reinsured Loan. Will each of us get a payment?
- Who are the lawyers handling the case?
- I do not want to participate in the lawsuit and/or I want to bring my own lawsuit. How do I exclude myself from this Settlement?
- I do not agree with this Settlement. How do I object to the Settlement?
- How do I find out more information about the Settlement?
No. You are not being sued.
Named Plaintiffs Donna Moore, Frenchola Holden and Keith McMillon filed this lawsuit, Moore, et al. v. GMAC Mortgage, LLC et al., Civil Action No. 2:07-cv-04296-PD (E.D. Pa.), in the United States District Court for the Eastern District of Pennsylvania, naming GMAC Mortgage, LLC (“GMAC Mortgage”), GMAC Bank (now known, and herein referred to, as “Ally Bank”), and Cap Re of Vermont, LLC (“Cap Re”) as defendants (collectively, “Defendants”). The Action was filed as a proposed class action.
The Named Plaintiffs in this Action allege that Defendants entered into “captive reinsurance arrangements” for the purpose of receiving kickbacks, referral payments and unearned fee splits (disguised as “reinsurance premiums”) from private mortgage insurers to whom GMAC Mortgage referred borrowers in violation of Section 8 of the federal Real Estate Settlement Procedures Act of 1974, 12 U.S.C. §§ 2601 et seq (“RESPA”). Portions of the mortgage insurance premiums paid to Cap Re, GMAC’s-affiliated “lender captive reinsurer” who, Named Plaintiffs allege, assumed very little or no risk under the reinsurance contracts and, therefore, did not provide real or commensurately priced reinsurance in violation of RESPA.
3. Why did I receive the Class Notice?
You received the notice because you obtained a residential mortgage loan from GMAC and paid for private mortgage insurance (“PMI”) which was reinsured by Cap Re On April 29, 2014, the Court entered an Order preliminarily approving the Settlement, preliminarily certifying a class and appointing the Named Plaintiffs as class representatives for settlement purposes only, appointing Kessler Topaz Meltzer & Check, LLP as Lead Class Counsel and Bransom, Plutzik, Mahler Birkhaeuser, LLP, Berke, Berke & Berke, and Travis & Calhoun as Class Counsel (collectively, “Plaintiffs’ Counsel”), ordering notice of the Settlement to Class Members and approving the form and manner of class notice, and setting a date for a Final Approval Hearing on September 17, 2014.
4. What is the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq.?
The Real Estate Settlement Procedures Act of 1974, 12 U.S.C. §§ 2601 et seq. or RESPA is a federal law concerning, among other things, mortgage closing costs and settlement procedures. RESPA requires that consumers receive certain disclosures at various times during their mortgage transaction and prohibits kickbacks that tend to increase the cost of settlement services. More information about RESPA can be found at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm.
In this Action, as defined in the Settlement Agreement (“Settlement Agreement”), a reinsured loan means a residential mortgage loan originated (a) that was originated and/or acquired after January 1, 2004, by GMAC Mortgage, Ally Bank, of their affiliates and (b) that was reinsured by Cap Re.
6. What is the difference between Private Mortgage Insurance (“PMI”) and Reinsurance?
PMI protects mortgage lenders against default by the borrower. Mortgage lenders generally require that borrowers obtain PMI if they have a low down payment — usually less than 20% of the cost of the property. (PMI is also known as Mortgage Insurance (MI) or Lender Mortgage Insurance (LMI).) The PMI company, in order to reduce its underwriting risk, sometimes passes part of this risk to another insurance company, by purchasing reinsurance on a percentage of the mortgage insurance.
7. What is the amount of the Settlement?
Defendants have agreed to provide $6,250,000 (six million two hundred fifty thousand U.S. dollars) to establish a Settlement Fund. Subject to, and in accordance with, the terms and conditions of the Settlement Agreement, the Settlement Administrator shall provide to each Participating Class Member their distribution of the Net Settlement Amount (“Settlement Payment”).
8. What amounts are being deducted from the Settlement Fund?
The Settlement Fund will be used to pay: (a) Settlement Payments to Participating Class Members, as awarded by the Court and subject to the procedures set forth in the Settlement Agreement; (b) attorneys’ fees in an amount not to exceed 30% of the Settlement Fund and reimbursement of the litigation costs/expenses of Plaintiffs’ Counsel, as awarded by the Court; (c) Case Contribution Awards to the Named Plaintiffs for their services in the Action, as approved by the Court and not to exceed $5,000 each; (d) fees and costs of the Settlement Administrator, including the costs of Class Notice; and (e) any other Administrative Costs incurred in connection with the implementation of the Agreement.
9. Who is eligible to receive a Settlement Payment?
All borrowers who obtained residential mortgage loans originated and/or acquired by GMAC Mortgage, Ally Bank, and/or their affiliates on or after January 1, 2004, with private mortgage which was reinsured by Cap Re.
10. How was my payment calculated?
Participating Class Members’ Settlement Payments were distributed on a pro rata basis. Only one check was issued per Reinsured Loan, regardless of the number of co-borrowers on the loan.
11. I didn’t file a claim. Can I do so now?
You were not required to file a claim. If you are a Class Member and and did not exlude yourself or “Opt-out” of the Settlement, you were not required to do anything. Defendants provided the relevant information to identify Class Members and calculate the Settlement Payments to Lead Counsel and the Settlement Administrator.
12. I have more than one Reinsured Loan. How much will I receive?
A Class Member with more than one Reinsured Loan during the Class Period shall be entitled to a separate Settlement Payment for each Reinsured Loan.
13. There is more than one borrower on my Reinsured Loan. Will each of us get a payment?
No. Co-borrowers entitled to Settlement Payment on account of the same Reinsured Loan shall only receive one Settlement Payment jointly to all such co-borrowers. In the event there are multiple Class Members listed as obligors to a Reinsured Loan entitled to a Settlement Payment and there are multiple addresses listed for those Class Members, the check shall be mailed to the address associated with the Reinsured Loan. Defendants, Named Plaintiffs, and their respective counsel shall have no liability to any co-borrower arising from any claim regarding the division of such funds among co-borrowers.
14. Who are the lawyers handling the case?
The Court has preliminarily appointed, for the purpose of the proposed Settlement only, the following as Lead Class Counsel for the Class:
Edward W. Ciolko, Esq.
Terence S. Ziegler, Esq.
KESSLER TOPAZ MELTZER & CHECK, LLP
280 King of Prussia Road
Radnor, PA 19087
The deadline to exclude yourself or "opt-out," of the Settlement Class was August 12, 2014.
16. I do not agree with this Settlement. How do I object to the Settlement?
The deadline to object to the Settlement was August 12, 2014.
17. How do I find out more information about the Settlement?
If you still have questions about the Settlement, please send an email to: gmacpmisettlement@ktmc.com. This e-mail will go to Kessler Topaz Meltzer & Check, LLP, Lead Class Counsel and will be directed to the individuals handling the Settlement. Lead Class Counsel has also set up a toll free number, (877) 899-2980, if you prefer to call with your questions.