CFPB Targets Private Insurer Over Alleged Kickbacks

""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 ""CFPB"":http://www.consumerfinance.gov/newsroom/the-cfpb-takes-action-against-mortgage-insurer-to-end-illegal-kickbacks-to-lenders/

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""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 bureau said in its announcement.

In return for the kickbacks, lenders provided RMIC with referrals for private mortgage insurance business.

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RMIC has allegedly engaged in these activities, which violate federal consumer laws, for 10 years, according to CFPB.

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

""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,"" Cordray added.

RMIC has agreed to pay the $100,000 fine, end its illegal kickback activities, and report regularly to CFPB regarding compliance. The agency will also be monitoring RMIC.

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.""

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, and it is awaiting signing by a judge to become effective.

The bureau has been cracking down on kickbacks, having already filed similar actions against four other insurers ""earlier this year."":http://www.consumerfinance.gov/newsroom/the-cfpb-takes-action-against-mortgage-insurers-to-end-kickbacks-to-lenders/