CFPB Alleges PHH Corp. Engaged in MI Kickback Scheme
The Consumer Financial Protection Bureau alleges that PHH Corp. has engaged in a kickback scheme involving referrals to mortgage insurance companies, which the mortgage lender denies.
“We intend to vigorously defend ourselves against the CFPB's allegations,” says PHH spokesman Dico Akseraylian.
According to the bureau, PHH Corp. referred borrowers to mortgage insurers it partnered with and these MI companies purchased reinsurance from a PHH insurance subsidiary.
A CFPB investigation found that “PHH took the reinsurance fees as kickbacks, in violation of the Real Estate Settlement Procedures Act,” according to the notice of charges. Over a 15-year period, PHH collected “hundreds of millions of dollars in kickbacks,” the CFPB says.
The Mount Laurel, N.J.-based mortgage company denied the allegations. “We are deeply disappointed that the CFPB has filed a notice of charges related to our mortgage reinsurance subsidiary, Atrium Insurance Corp. Atrium assumed significant risks, paid substantial claims, and we believe complied with applicable statutory and regulatory requirements in existence during the period Atrium was engaged in the mortgage reinsurance business,” the company said.
In most of the CFPB referral cases, the lender, title company or builder agreed to a settlement and paid a fine. It appears the PHH case will be the first that will go to trial before an administrative law judge.