Citibank, N.A., and CitiMortgage, Inc. (together, Citi), haveagreed to settle a putative class action lawsuit over force-placedinsurance (FPI). Under the settlement, members of the proposedsettlement classes will be entitled to receive more than $110million in refunds of FPI premiums that were charged to theiraccounts by Citi.

Specifically, settlement class members who were charged forforce-placed hazard insurance will receive back 12.5% of theirforce-placed hazard insurance premiums upon submitting a claim,which represents over 83.3 percent of the allegedly unlawfulcommissions that Citi's affiliate received on force-placed hazardinsurance (15% of the premium), from its force-placed insurancevendor.

Moreover, Citi has agreed to refund eight percent of theforce-placed flood insurance premiums and 8% of the force-placedwind insurance premiums to settlement class members who submitclaims, even though no commissions were paid to Citi or itsaffiliates on flood or wind insurance.

The settlement agreement also provides for injunctive relief.For example, the settlement forbids Citi and its affiliates fromaccepting commissions or any other form of compensation inconnection with FPI for a period of six years, and also forbidsAssurant, Inc., American Security Insurance Company, and StandardGuaranty Insurance Company (collectively, the Assurant Entities)from offering commissions or other compensation to Citi for thesame period of time.

In addition, the settlement places limits on the amount ofinsurance coverage that Citi may require borrowers to maintain, andrequires Citi to offer settlement class members the opportunity toreduce their flood insurance coverage if Citi increased theircoverage requirement (post-origination) to an amount in excess ofthe amount required under federal law.

Further, the settlement requires Citi to attempt to renew asettlement class member's existing insurance coverage, uponrequest, in the event of a lapse in coverage, prior to purchasingany force-placed coverage.

The settlement agreement resolves all lender-placed insuranceclaims asserted against Citi in Casey v. Citibank,N.A. et al., No. 5:12-cv-820 (N.D.N.Y.)and Coonan v. Citibank, N.A. atal., No. 1:13-cv-353 (N.D.N.Y.), which have been consolidatedin the U.S. District Court for the Northern District of NewYork.

In addition, the settlement resolves the lender-placed insuranceclaims asserted against Assurant inthe Coonan action.

The settlement, however, does not resolve the claims inthe Casey action against MidFirst Bank,N.A. d/b/a Midland Mortgage and FirstInsure, Inc.

The court will hold a hearing on the settlement agreement onMarch 14.

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