Private Mortgage Insurance CompaniesMortgage insurance for private customers
"CFPB claims that the four insurance companies Genworth U.S. Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc. in return for references to the United Guaranty Corporation, Radian Guaranty Inc.
Mortgage Guaranty Insurance Corporation, by offering creditors a kickback in conjunction with the acquisition of capstive re-insurance that, according to CFPB requirements, was intended to help creditors achieve higher hedges. CFPB alleges that these caps retrocession transactions violate RESPA as the forecasted value of the retrocession was lower than the premium payments made by mortgage insurance companies to the reinsurers.
According to the suggested assent orders submitted to the United States District Court for the Southern District of Florida, the mortgage insurance companies will do so: i) Collectively fine CFPB $15 million; ii) Stop payment of "illegal setbacks"; iii) Do not engage in new proprietary mortgage re-insurance agreements with mortgage bank associates; and iv) Subject to supervision and regulatory disclosure.
The four companies all reached an understanding that they would NEVER take out mortgage insurance with mortgage creditors. Apart from the verifiable fact that there is nothing in itself unlawful or inappropriate about capstive mortgage reassurance, the measures and the resulting arrangement are amazing in their scope. Cordray said: "Illegal setbacks are distorting the market and may increase the consumer exposure to the home.
" Cordray added that CFPB believed that "these mortgage insurance companies have paid well over a decade to mortgage creditors tens of billions of dollars". Today's orders end this type of agreement and demand that these insurance companies provide more than $15 million in fines for violations of the laws.
Genworth U.S. Mortgage Insurance Chairman and Chief Executive Officer Rohit Gupta stated that the CFPB "has made no determination that Genworth or any other entity has infringed any laws. "Gupta stated that "Genworth has pledged to end this investigation so that we can concentrate our efforts on working with our clients to help them acquire and sustain responsible home ownership and to eliminate the uncertainty associated with such an investigation and any disputes that may arise.
" United Guaranty also noted that United Guaranty "has declared its willingness to address a possible Consumer Financial Protection Bureau issue through industry-wide captive re-insurance practice that largely ceased in 2008-2009. The United Guaranty spokesman added that the company "believes these policies are lawful and equitable to the consumer, but has regulated the issue to prevent the distractions and costs of lengthy legal disputes.
" CFPB has not yet identified the creditors participating in the purported killbacks and CFPB's Enforcement Director, Kent Marcus, has explicitly refused to determine which creditors obtained the killbacks or how much they were actually disbursed as CFPB's investigations continue. Tonight we're gonna be talking about those who pay the bribes.
" It is clear that the current CFPB inquiry also concerns the creditors who obtained the bribes.