By Gretchen Wegrich
The Consumer Financial Protection Bureau (CFPB) continued to live up to its name today, when the agency announced it was taking action to end what it described as 'imporper kcikpacks paid by mortgage insurers to mortgage lenders in exchange for business.' The CFPB targeted four national mortgage insurance companies in the filed complaints, which required that the mortgage insurers pay more than $15 million in penalties to the CFPB.
"Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers,” said CFPB Director Richard Cordray in a release. “We believe these mortgage insurance companies funneled millions of dollars to mortgage lenders for well over a decade. The orders announced today put an end to these types of arrangements and require these insurers to pay more than $15 million in penalties for violating the law.”
The CFPB alleged that the companies' violation of federal consumer financial law was widespread in the years leading up to the financial crisis. The four companies under scrutiny are Genworth Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc., and Mortgage Guaranty Insurance Corporation.
The companies are accused of providing kickbacks to mortgage lenders by purchasing captive reinsurance that had almost zero value but was intended to make a profit for the lenders.
Under the settlement proposed by the CFPB, the four mortgage insurance companies must change their practices and pay a fine to the CFPB.
The companies have agreed to:
For more information, visit the Consumer Financial Protection Bureau Newsroom.
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