Robinson V Standard Mortgage Corporation


standard mortgage corporation

I’ve read several complaints about Standard Mortgage Corporation, including Robinson’s claims of extortion. In particular, I’ve read about Standard Mortgage’s failure to pass on force-placed insurance and its kickback agreement with SM Insurance. While this isn’t the end of the world, I’m not sure I’d recommend working with them. For my part, I’ve always felt they were unfair to me.

Robinson’s Claims Of Extortion

The underlying theory of Robinson’s extortion claim against Standard Mortgage is that the lender coerced borrowers into paying inflated force-placed insurance premiums. But Robinson’s claim fails under the law because she had contractual obligations to maintain continuous insurance coverage for her mortgaged property, and Standard Mortgage repeatedly informed her that there were less expensive insurance options available to her. Robinson’s claim against Standard Mortgage is also devoid of merit.

In addition, the Amended Complaint fails to state a claim of mail fraud or wire fraud. These claims, therefore, must be dismissed. Robinson does not allege that he received any kickback in exchange for providing his personal information. As a result, the Amended Complaint fails to state a claim of extortion under federal wire fraud or mail fraud statutes.

Standard Mortgage’s Failure To Pass Along Force-Placed Insurance

In a recent case, the federal government found that Wachovia’s fees on force-placed insurance were a “kickback.” Defining a kickback as a divided loyalty is problematic in a number of contexts, but the facts of this case are different. In this case, the loan agreement makes it clear that the insurance requirement is primarily intended to protect the lender.

Typically, mortgage servicers improperly imposed expensive insurance coverage on homeowners, to protect the lender’s interest while covering the lender’s. This type of insurance is known as “lender-placed insurance,” and is often expensive. However, federal law puts strict limits on mortgage servicers’ ability to purchase this type of insurance without a reasonable basis and requires them to notify the homeowner of the purchase before it occurs.

Standard Mortgage’s Failure To Act On Robinson’s Behalf

The defendants in Robinson v. Standard Mortgage Corporation, both for-profit corporations, have denied that they acted negligently. In defending their actions, the federal government cites the Housing and Economic Recovery Act, which authorized the conservatorship of the Companies. Robinson’s claims are based on Treasury agreements that enabled the Company to receive dividend payments. Robinson has not yet filed a motion to vacate the conservatorship.

In his complaint, Robinson argues that the Federal Housing Finance Agency (FHFA) ceded its independence to the Treasury, violating HERA, which requires that it be “not subject to direction by any other agency.” The Third Amendment obstructs the Companies’ ability to pay dividends to junior stockholders. Robinson sued the FHFA, its Director, and Treasury on the basis that these actions violated the Administrative Procedure Act and his constitutional rights. The district court rejected this argument, finding that Robinson’s claims were barred by HERA’s “limitation on judicial action.”

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