--- title: "PHH Corp. to Pay $29.4M Over Mortgage Insurance Kickbacks" meta: "og:description": "PHH Mortgage settles a 17-year RESPA class action for $29.4M. Homeowners alleged illegal insurance kickbacks. Eligible class members to receive $875 per loan." "og:title": "PHH Corp. to Pay $29.4M Over Mortgage Insurance Kickbacks" description: "PHH Mortgage settles a 17-year RESPA class action for $29.4M. Homeowners alleged illegal insurance kickbacks. Eligible class members to receive $875 per loan." --- February 16, 2026 # **PHH Corp. to Pay $29.4M Over Mortgage Insurance Kickbacks** PHH Mortgage settles a 17-year RESPA class action for $29.4M. Homeowners alleged illegal insurance kickbacks. Eligible class members to receive $875 per loan. [**Real Estate Fraud**](https://exlitem.com/jury-verdict/phh-corp-to-pay-294m-over-mortgage-insurance-kickbacks/jury-verdict/category/real-estate-fraud) [**Consumer Rights**](https://exlitem.com/jury-verdict/phh-corp-to-pay-294m-over-mortgage-insurance-kickbacks/jury-verdict/category/consumer-rights) ### **Outline** Author ![](https://media.jurimatic.com/cdn-cgi/image/q=70/profile_images/shared_image_1.webp) **Sohini Chakraborty****Sohini Chakraborty is a lawyer, with over two years of experience in legal research and analysis. She specializes in working closely with expert witnesses, offering critical support in preparing legal research and detailed case studies.** ![Article Image](https://media.jurimatic.com/cdn-cgi/image/q=70/images/Munoz.webp) In a significant resolution to a legal battle spanning nearly two decades, PHH Corporation and its subsidiaries reached a $29,494,500 settlement with a massive class of homeowners. The lawsuit, originally filed in 2008, alleged that PHH operated a "captive" reinsurance scheme through Atrium Insurance Corporation to solicit illegal kickbacks from mortgage insurers. Plaintiffs Efrain Munoz, Leona Lovette, and Stephanie Melani argued that these secret arrangements violated the Real Estate Settlement Procedures Act (RESPA) by inflating costs for borrowers without providing actual insurance risk. Despite PHH’s long-standing defense that their practices were lawful, the court granted final approval of the settlement in December 2025, marking the end of one of the longest-running consumer finance disputes in the Eastern District of California. ## **Case Background** The legal battle began in June 2008 when homeowners Efrain Munoz, Leona Lovette, and Stephanie Melani sued PHH Corporation and its subsidiaries. They claimed that the financial giant had orchestrated a complex scheme to pocket illegal kickbacks from mortgage insurers. For years, the case wound through the federal Court system in California, involving extensive discovery and numerous legal challenges. The Plaintiffs represented a massive class of borrowers who had all obtained loans through PHH and paid for private mortgage insurance. ### **Cause** The Plaintiffs alleged that PHH violated the Real Estate Settlement Procedures Act (RESPA). They argued that PHH forced borrowers to use specific mortgage insurers who then funneled a portion of the premiums back to PHH through a "captive" reinsurance company called Atrium Insurance Corporation. ### **Injury** The lawsuit stated that borrowers suffered financial harm because these kickbacks artificially inflated the cost of settlement services. The Plaintiffs argued that the money paid to Atrium was not for actual insurance risk but was simply a disguised way for PHH to take an illegal cut of the borrowers' payments. ### **Damages Sought** The Plaintiffs sought to recover three times the amount that any class member paid for mortgage insurance during the time the kickback scheme was active. They also requested that the Court award them attorneys' fees and the costs of the litigation. ## **Key Arguments and Proceedings** The litigation lasted seventeen years, during which the parties argued over whether the homeowners had the right to sue and whether the reinsurance deals were legitimate. In March 2025, just before a major hearing and a bench trial were set to begin, the parties finally agreed to settle the case. ### **Legal Representation** **Plaintiffs:** Efrain Munoz | Leona Lovette | Stephanie Melani. · **Counsel for Plaintiffs:** Alan R. Plutzik | Catherine Owens | Donna Siegel Moffa | Eric G Calhoun | James Maro | Jennifer S Rosenberg | Johnston Whitman | Lisa M. Port | Paul Anthony Rigali | Robert M. Bramson | Stephen G. Larson | Steven E. Bledsoe | Amanda R. Trask | Edward W. Ciolko | Joseph H. Meltzer | Joshua A. Materese | Natalie Lesser | Terence S. Ziegler **Defendants:** PHH Corporation | PHH Mortgage Corporation | PHH Home Loans, LLC | Atrium Insurance Corporation. · **Counsel for Defendants:** Anne Railton | Joseph S. Genshlea | Richard Mark Strassberg | Sabrina M. Rose-Smith | Tierney Smith | Valerie A. Haggans | David M. Souders | Hayes P. Hyde | Michael S. Trabon | Sandra B. Vipond ## **Key Arguments or Remarks by Counsel** Plaintiffs' counsel argued that PHH's reinsurance arrangement was a "secretive conspiracy" designed to bypass federal law. They pointed out that Atrium collected hundreds of millions of dollars in premiums while paying out zero in claims, proving it took on no real risk. ### **Claims** The homeowners brought two primary claims under RESPA: · **Illegal Kickbacks:** They alleged PHH accepted fees or "things of value" in exchange for referring mortgage insurance business. · **Unearned Fee Splitting:** They claimed PHH took a cut of the insurance premiums without performing any actual services to justify the payment. ### **Defense** PHH denied all allegations of wrongdoing. In their formal response, the Defendants argued that the Plaintiffs’ claims were barred by various legal doctrines, including the statute of limitations and the "unclean hands" defense. They maintained that their reinsurance practices were legal and that Atrium provided legitimate services. ## **Settlement** The case did not reach a jury verdict because the parties reached a settlement that the Court approved on 19th December 2025. - **Class Member Payouts:** Every eligible class member receives a flat payment of $875 per loan. - **Total Estimated Payout:** The parties estimated that the total payout to the class would reach approximately $29,494,500. - **Attorneys' Fees and Costs:** The Court awarded the Plaintiffs' lawyers $9,031,000 in fees and $2,074,556.63 for the costs of the litigation. - **Incentive Awards:** The five representative Plaintiffs each received $5,000 for their efforts in leading the litigation over seventeen years. The settlement administrator successfully delivered notices to 92.7% of the identified class members. 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