Home / News / Government / CFPB Hits Private Insurer with $100K Fine
Print This Post Print This Post

CFPB Hits Private Insurer with $100K Fine

""Republic Mortgage Insurance Corporation (RMIC)"":http://www.rmic.com/Pages/default.aspx faces a $100,000 fine and enhanced supervision by the ""Consumer Financial Protection Bureau (CFPB)"":http://www.consumerfinance.gov/ for allegedly offering illegal kickbacks to lenders in return for business referrals, according to an announcement from the ""CFPB."":http://www.consumerfinance.gov/newsroom/the-cfpb-takes-action-against-mortgage-insurer-to-end-illegal-kickbacks-to-lenders/

[IMAGE]

""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 CFPB stated.

In return for the kickbacks, the bureau says lenders provided RMIC with referrals for private mortgage insurance business. RMIC has allegedly engaged in these activities, which violate federal consumer laws, for 10 years, according to the CFPB.

RMIC could not be reached for comment at the time of publication.

[COLUMN_BREAK]

""Kickbacks for mortgage insurance referrals are illegal, and can drive up costs for consumers seeking to buy a home,"" said Richard Cordray, director of the CFPB. ""The order announced today will put an end to this practice and require RMIC to pay a $100,000 penalty for violating the law.""

RMIC has agreed to pay the $100,000 fine, end its illegal kickback activities, and report regularly to the CFPB regarding compliance, according to the bureau's announcement. The CFPB says it will also be monitoring RMIC to ensure it remains compliant with the terms of the agreement.

The CFPB explained in its announcement that the penalty amount was influenced by the fact that RMIC is ""currently under administrative supervision with the North Carolina Department of Insurance due to its inability to honor its payment obligations in full.""

The CFPB filed its proposed ""consent order"":http://files.consumerfinance.gov/f/201311_cfpb_consent-order_RMIC.pdf with the United States District Court for the Southern District of Florida. The order is awaiting the signature of a judge to become effective.

The CFPB has been cracking down on captive reinsurance kickbacks. The federal agency ""filed similar actions"":http://dsnews.comarticles/cfpb-files-complaints-against-4-mortgage-insurers-alleging-illegal-kickbacks-2013-04-04 against several other private insurers--Genworth U.S. Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, Radian Guaranty Inc., and United Guaranty Corporation--earlier this year. Collectively, the four companies were subject to $15.4 million in penalties.

x

Check Also

Senate Hearing Tackles National Flood Insurance Program Reauthorization

Senate Banking Committee Chair Sharrod Brown recently held a hearing to discuss the future of the National Flood Insurance Program, featuring a panel of experts highlighting the many repercussions of an expiration in the program.