CFPB Takes Action Against Mortgage Insurers to End Kickbacks to Lenders
The CFPB has announced four enforcement actions to end what the Bureau believes to be improper kickbacks paid by mortgage insurers to mortgage lenders in exchange for business. The CFPB filed complaints and proposed consent orders against four national mortgage insurance companies in order to stop these practices, which have been prevalent for more than 10 years. The proposed orders require the four mortgage insurers to pay more than $15 million in penalties to the CFPB.
The CFPB alleges that four mortgage insurance companies violated federal consumer financial law by engaging in widespread kickback arrangements with lenders across the country. The CFPB believes the mortgage insurers named in today’s enforcement actions provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders.
The four companies named in the actions are Genworth Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc., and Mortgage Guaranty Insurance Corporation. According to the CFPB, in exchange for kickbacks, these mortgage insurers received lucrative business referrals from lenders.
The proposed consent orders have been signed by the CFPB and the named companies. The proposed consent orders have been filed with the United States District Court for the Southern District of Florida court and will have the full force of law only when signed by the presiding judge. The complaint is not a finding or ruling that the defendants have actually violated the law.
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