California Real Estate Fraud Report

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Florida Mortgage Companies Subject to CFPB Complaints for RESPA Violations

This article is directly from the California Association of Realtors (CAR) Realegal newsletter.

” . . . on April 4, 2013, the CFPB filed complaints in a federal court in Florida against four national mortgage insurance companies for alleged illegal kickbacks to lenders using captive reinsurance schemes (as explained below). These complaints were the first RESPA enforcement actions taken by the CFPB since it took over enforcement authority from the U.S. Department of Housing and Urban Development (HUD) in July 2011 in accordance with the Dodd-Frank reform law. For this set of lawsuits, the CFPB believed that, for over 10 years, the named mortgage insurers engaged in a prevalent practice of funneling millions of dollars to mortgage lenders in exchange for the referral of business. The mortgage insurers have settled their claims by agreeing to pay $15.4 million and refrain from engaging in these arrangements, but they have admitted no wrongdoing.

The captive reinsurance arrangements alleged in the April 4 complaints involve the mortgage insurance companies issuing mortgage insurance for loans originated by a certain lender, and the lender’s subsidiary company providing reinsurance to cover the mortgage insurer’s risk of loss. Captive reinsurance schemes can also involve settlement service providers other than mortgage insurers and lenders.”

Publisher’s Note: although kickbacks and “referral fees” are common in the real estate and mortgage industries, punishment for violating RESPA provisions is severe.

© Copyright 2007-2018 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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