The Consumer Financial Protection Bureau today announced four enforcement actions against four of the largest mortgage insurers for their participation in kickbacks paid by mortgage insurers to lenders in exchange for business.
The companies, including Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, Radian Guaranty Inc., and United Guaranty Corporation are required to pay a collective $15 million in penalties to the CFPB.
“While mortgage insurance can help borrowers get a loan, the financial burden it imposes is clearly magnified if the cost is inflated by illegal kickbacks,” said CFPB Director Richard Cordray in a call with reporters. “That harms not only consumers, but entire communities, the housing market, and the economy as a whole. These are precisely the kinds of concerns that led Congress to pass the Real Estate Settlement Procedures Act (known as “RESPA”) almost forty years ago.”
The CFPB found in its investigation that the insurers violated RESPA through their participation in the widespread kickback arrangements involving many lenders across the country. The agency alleges those insurance companies provided kickbacks to mortgage lenders in their purchase of captive reinsurance designed to help lenders profit.
The lenders involved in the kickbacks have not been named.
The four companies that are subject to the enforcement actions will be subject to additional examination under the CFPB including company reports to monitor their compliance.
Written by Elizabeth Ecker