MPP Lawsuit (Update 1)

class-actionManulife, Benesure, Davis + Henderson (D+H) and others are reportedly being sued for over $2 billion combined.

It’s part of a class action that alleges (among other things):

  • Benesure underwrote and marketed creditor life insurance—known as the “Mortgage Protection Plan”, or “MPP”—without a licence, and with Manulife’s knowledge and consent. (Manulife purchased Benesure back in October 2012.)

  • Manulife and Benesure presented “deceptive” form documents to clients and sent letters that appeared to be from the client’s mortgage broker and that “strongly” recommended purchasing creditor life insurance.
  • Davis + Henderson transmitted personal information about mortgage clients to Manulife and Benesure without the clients’ consent. (This information was purportedly taken from people’s mortgage applications, which D+H controls by virtue of owning the Expert mortgage origination platform.)

At this point, we have little information about the validity of these claims. The above comes from court documents provided to us on the condition of anonymity.

D+H provided us this comment today:

Privacy and protecting our clients’ personal
information is at the core of our business at D+H. The allegations that have
been made against D+H in this suit are completely without merit, and D+H will
be vigorously defending itself against these allegations.  D+H, its
employees and products, adhere to and respect all privacy laws applicable to
its business and its clients’ personal information.

Manulife said this:

the litigation is now before the courts, it would be inappropriate to comment…Insurance policyholders that purchased Mortgage Protection Plan (MPP)
insurance can feel confident that their policies are backed by a leading
insurance company with some of the strongest financial strength ratings.

We’ll pass along additional insights as they become available.

Rob McLister, CMT

  1. I have to say that I have never sold MPP as a viable insurance because it is not- instead I refer to my investment/insurance advisor but I’ve had major issues with MPP for years. They would send clients letters and lead the client to believe that the letter came from our office and contacting them to offer them insurance.

  2. It truly is about time. I have made reference with MPP for years that the letters they send (their catch letter, that the try to position as helping me out) is against the law. I am happy to see they have finally been taken to task. The outcome is likely moot, the mere fact that they are being scrutinized at the highest level is good for our industry.

  3. Interesting.
    Last year a client called me after our deal closed and said that he had just received a letter from a large mortgage brokerage company that I am not in any way associated with.
    The letter included a quote from MPP on their letterhead with all of his confidential mortgage details concerning the deal we had just closed (he didn’t take the mortgage insurance I am required to offer – in fact, I’ve never sold it to a single client.)
    I contacted the lender and showed them a copy of the letter and they knew nothing about it. Since this was the first time this had happened I closed the file and moved on but I now wonder if that is related to this case.
    If anyone working on this lawsuit reads this posts and wants to contact me I would be happy to share the letter and the quote.
    I asked him for the letter but he

  4. if your client had worked with that large brokerage at some point (as well as or before working with you), and they had rec’d a commitment from a lender, an mpp would have been generated on filogix would it not? and had that brokerage not specifically cancelled the mpp, then mpp would have generated a follow up letter. whenever mpp insurance is generated, if mpp doesnt receive confirmation from the broker that the insurance was waived/taken/mortgage was cancelled, they (mpp)generate an email to the broker to confirm the status. if that email is not replieed to within a certain timeframe, then letters are generated to the client. perhaps that happened in your clients’ case?

  5. …if you don’t respond to MPP what gives them the authority to contact the client?
    This litigation raises a whole new issue of what is done with the data that brokers provide D&H. Are brokerages at unknown risk because, they have agreed to the D&H contract terms? …and those terms allow D&H to “resell” the data?
    Over the last few years the “mandatory fields” have grown exponentially.
    To whose benefit?

  6. I am of the same opinion as Jason. I have never believed in the mpp concept and always referred my customers to insurance brokers. It’s been a thorn in my side over the years that my customers get “those catch letters”. I am thrilled that issue is being put out there in the public eye.

  7. This couldn’t have happened sooner. I am a mortgage agent and licensed and trained as such. I am not in the business of selling insurance or qualified to do so But the system forces me to do so,under duress. I always recommend that clients speak to an independent insurance agent or insurance company directly. Its lucky that there is an option in place of Filogix/D&H, if this ends up being true , there finished, back to being a label printer..

  8. Thank you very much for taking this issue to task. I have been fighting this issue for years. I also have not embraced the MPP product for many reasons. Interested to learn of the outcome.

  9. Pfffft!
    Hi Rob….long time reader first time poster.
    As a independent financial advisor I can tell you that many of my “third party” suppliers follow up and try to poach my clients this way. I almost expect it to happen now and take steps to counter this predatory action.
    etc etc
    Doesn’t matter……..
    This is nothing new. Just another attempt at circumventing the chinese wall.
    Remember the quote from fight club….if
    x + Y is more then the average out of court settlement……we don’t do a recall…..or in this case….. getting sued is less costly then poaching.

  10. Filogix and D&H are brokers biggest enemy! They provide 0 Value to our industry! charge our lenders crazy fees! (6.5 Basis Points)and provide ZERO in return! when was the last time Filogix provided a cool CRM tool for Brokers?
    All brokers and brokerages spend Thousands of Dollars to build and design a CRM! why didnt Filogix build that for brokers?
    Filogix would make 6.5 Basis point on $70-80 Billion Origination every year, how much have they contributed to the industry, training and innovations?
    Filogix and D&H doesnt give a @#$%*^&^ about brokers and like every other partner we have; we are just a ONE night stand!

  11. 1) Having been a Life Insurance Agent for many years as well as a Mortgage Broker for decades, I refer my clients both to other Life Insurance brokers when more specialized work is needed as well as using various creditor mortgage insurance programs through our mortgage brokerage, including Mortgage Protection Plan, backed by ManuLife. Most clients already have personal life insurance in place and waive any new application for creditor life insurance, which generally is a lower form cost of protection because it is group insurance, versus most personal life insurance – term, whole life, universal life plans, etc. Some clients take both creditor mortgage insurance to add to their personal life insurance, when a new mortgage is arranged for a larger amount than their existing mortgage.
    2) Duty to your client and Liability
    Having faced survivors of my former deceased mortgage clients is a duty that makes me realize to go the extra mile in getting a signature to either waive or accept the auto generated credit insurance, when a new mortgage is approved. You cannot help but feel sympathy with survivors that call you or face in person – and ask you why you didn’t try harder to convince their loved ones to take mortgage insurance – creditor insurance quite often is typically under $1 a day. One nice feature I like about Mortgage Protection Plan is them providing an Indemnification Certificate with every file, including borrowers that waive, so that as a mortgage brokerage, you can prove later that you did your due diligence in trying to arrange insurance protection – and avoid costly liability from lawyers representing grieving family survivors – I’ve been there. The other credit insurance programs don’t offer this indemnity.
    3)Not sure if all mortgage brokers have only the MPP option provided by the Filogix Expert platform, but forcing mortgage brokers to use only one creditor insurance program is wrong and is something D&H should expand if this is the case. However, we receive email reminders from MPP’s “SafetyCatch” program that nothing has been received on an approved file. Mortgage brokers have the option in these emails NOT to have letters sent to the client reminding them also. My understanding of this SafetyCatch program is to not miss any new borrower for not having the opportunity to consider taking insurance or not and confirm in writing – preventing problems in the future should they pass away prior to their mortgage being paid off and helping mortgage brokerages avoid liability but not doing do diligence. I think the info that Filogix uses to produce the personalized insurance quote for borrowers from the broker application is Name, Address, Age, Mortgage Loan amount and total payments including property taxes [ for disability insurance ] and amortization period.
    4) Clients that require a branch visit with the bank, will also be offered and have to decide in front of the bank mortgage rep. whether to take the bank’s creditor mortgage insurance – in addition to any offered by their mortgage broker that originated the mortgage.
    5) Mail or Email sent to MY clients by MPP are on BEHALF of myself not secretively by MPP – or poached. I do appreciate the extra help so it frees up my time for new mortgage marketing. Perhaps the way Filogix is set up for other mortgage brokerages do not report back properly – i.e. a configuration issue. The allegations made in the law suit reported by the media I’ve seen seem to be based on incorrect information based on my experiences with the Mortgage Protection Plan.

  12. Indemnification will only apply if don’t use any other insurance carrier. In your case, you are using other carriers and MPP does not want you to be doing that so the indemnification will not apply in your case. That being said, i do agree that you should be able to offer other products or refer off to professionals that can go that extra mile to fully educate your client on what there getting them selves into.

  13. Actually the Alberta insurance council requires that I can only offer 1 product unless I have my life insurance license, and I know a friend that used the indemnification when one of his clients try to sue him because they didn’t take the MPP. MPP came to the table and resolved everything. We have options, but I would rather have my clients sign something with me than deal with them not getting anything and blaming me later. I went to a couple of MPP meetings and learned how the program works…If you take the time, you will understand why they do the things they do.. I will always be a MPP supporter..I have seen the difference they can make to my clients and for me and my business

  14. I have been a broker for many years and one thing I can say for sure is that we like to get paid, and at the same time we like to complain about processes. I have been to hundreds of meetings where lenders and partners pay for lunches just to help get agents in the office to give them information. Guranteed that these brokers who are making comments on the letters have never bothered to go to a meeting. It is not rocket science. If you don’t want a letter to go to your client, then follow the process…I have made thousands of dollars from offering MPP to my clients. I continue to pay for my family vacations and my clients don’t call me yelling and screaming that they are unhappy with MPP. Do your job right…treat your business partners right..If you don’t like MPP….don’t sell it..send back your compensation..but don’t take the money and complain about the process.

  15. As a Life Licensed advisor I have railed against creditor insurance for years and I felt great empathy for mortgage professionals who were, in many ways, forced to offer an inferior product to consumers. Although better than no insurance, creditor insurance is like the fast food of our industry – easy to purchase but not very nourishing and potentially dangerous if consumed without proper consideration.

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