On the heels of defending itself before a panel of Congress members this week, the Consumer Financial Protection Bureau announced Wednesday it is taking action against PHH Corporation for an alleged mortgage kickback scheme.
The CFPB is seeking injunction, restitution and penalties for a scheme it says has gone on for nearly two decades as conducted by the New Jersey-based company and its residential mortgage origination subsidiaries including PHH Mortgage Corporation and PHH Homes Loans as well as its wholly-owned subsidiaries Atrium Insurance Corporation and Atrium Reinsurance Corportation.
According to the CFPB’s allegations, PHH referred mortgage customers to mortgage insurer partners once it had originated those mortgages. In exchange, the insurers purchased “reinsurance” from PHH’s subsidiaries, which PHH took fees for in the form of kickbacks. In allegedly doing so, the company was in violation of The Real Estate Settlements Procedures Act (RESPA).
The company is suspected to have been involved in the kickback scheme since 1995.
In addition to the kickbacks, the CFPB also cites instances where the company overcharged for loans to customers who did not buy insurance from of the named partners and created higher-priced insurance as part of the operation.
The CFPB has not yet specified the amount of restitution or fines it is seeking from the company.
Written by Elizabeth Ecker