The Consumer Financial Protection Bureau (CFPB) has taken action against mortgage insurer Republic Mortgage Insurance Corporation (RMIC) for allegedly paying illegal kickbacks to mortgage lenders in exchange for business.
The CFPB filed a complaint and proposed consent order against RMIC to stop these practices, which have been prevalent for more than 10 years. The proposed order will require RMIC to pay a $100,000 penalty to the CFPB, and follows four similar actions announced earlier this year.
"Kickbacks for mortgage insurance referrals are illegal, and can drive up costs for consumers seeking to buy a home," said CFPB Director Richard Cordray. "The order announced today will put an end to this practice and require RMIC to pay a $100,000 penalty for violating the law."
In today's filing, the CFPB alleges that RMIC violated federal consumer financial law by engaging in widespread kickback arrangements with lenders across the country. The CFPB believes that RMIC provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders. The kickbacks were in exchange for referrals of private mortgage insurance business from the lenders.
RMIC is currently under administrative supervision with the North Carolina Department of Insurance to help it resolve its outstanding insurance claim obligations through a court-approved corrective plan.