Homeowners Due Refunds For Mortgage Insurance Overcharges
Attorney General Spitzer announced today that he has obtained a settlement that will result in consumers across the state receiving $4 million in refunds for mortgage insurance overcharges.
It's estimated that 10,000 New Yorkers will be eligible for the refund, with the average homeowner receiving $400. In addition, those eligible for the refunds will no longer have to pay mortgage insurance, thereby reducing their monthly payments.
State law prohibits insurance companies from charging consumers mortgage insurance once they have 25 percent equity in their homes. A year long investigation by Spitzer's office found that all six of the nation's mortgage insurance companies were continuing to collect the insurance premiums even after consumers had reached the 25 percent threshold.
"We want to make the dream of home ownership as available and affordable to as many New Yorkers as possible and this settlement helps achieve that goal," said Spitzer. "The settlement is important because we are obtaining refunds for those who have been overcharged, and we are bringing about needed reforms that will protect all other homeowners in New York in the future."
Typically, banks require homeowners to obtain private mortgage insurance if they are putting down less than 20 percent of a home's value at the time of purchase. On a $100,000 mortgage, the monthly costs for PMI would range from $30-$75 depending on the size of the down payment.
Consumers who were overcharged between November 1, 1997 and November 1, 2000 are eligible for the refunds. Over the next few months, the mortgage insurance companies and the banks holding loans will go through their records to determine which homeowners have been overcharged. Consumers should receive their refund checks by next July.
The six companies are: Mortgage Guaranty Insurance Corporation (MGIC) of Milwaukee; PMI Mortgage Insurance (PMI) of San Francisco; General Electric Mortgage Insurance Company (GEMICO) of Raleigh; Republic Mortgage Insurance Company (RMIC) of Winston-Salem; United Guaranty Residential Insurance of Greensboro; and Radian Guaranty, Inc. of Philadelphia.
Spitzer commended the companies for working with his office on the settlement, and for agreeing to implement policies to ensure that the overcharges no longer occur.
In entering into the agreement, the six companies deny any violation of law and have paid a combined sum of $125,000 to the Attorney General's Office to cover the costs of the investigation.
Also taking part in the news conference was Alexander Roberts, the Executive Director of Community Housing Innovations, Inc.
The case was handled by Assistant Attorney General Oliver A. Rosengart, and Bureau Chief Geneith Turnbull, of the Real Estate Financing Bureau, and by Assistant Attorney General Melvin Goldberg, Deputy Bureau Chief Dianne Dixon, and Bureau Chief Thomas Conway of the Consumer Frauds and Protection Bureau.