The Consumer Financial Protection Bureau has fined four of the nation’s largest mortgage insurance providers for alleged kickbacks to lenders in order to win more business, a practice the agency says has been going on for more than a decade.
The agency says the practice inflated borrowers’ costs because home owners were given policies that were based on business relationships and not competitive pricing.
The four mortgage insurance providers have been fined $15.4 million by the agency.
The four companies fined by the agency are Genworth Financial Inc., American International Group Inc.’s United Guaranty unit, Radian Group, and MGIC Investment Corp. The companies did not admit or deny any wrongdoing with the allegations. They said their relationships complied with federal law.
The CFPB is also investigating lenders who took part, and they may soon face fines as well, The Wall Street Journal reported.
“In every kickback situation, there’s somebody paying and there’s somebody receiving,” said Kent Markus, the CFPB’s assistant director of enforcement. “We have more work to do on this matter.”
Mortgage insurance is usually required when homebuyers purchase homes with down payments of less than 20 percent.