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CFPB Takes Action Against Mortgage Insurer to End Illegal Kickbacks to Lenders
Monday, November 18, 2013 5:55 AM

The Consumer Financial Protection Bureau (CFPB) has taken action against 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.

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.

In accordance with the proposed settlement, RMIC has agreed to:

  • End the practice
  • Payment of $100,000 in penalties
  • Compliance monitoring and reporting

The full text of the proposed consent order is available at: http://files.consumerfinance.gov/f/201311_cfpb_consent-order_RMIC.pdf

The full text of the complaint is available at: http://files.consumerfinance.gov/f/201311_cfpb_complaint_RMIC.pdf