The Department of Housing and Urban Development has announced $1.6 million in settlements with CitiMortgage Inc. and two major homebuilders who engaged in captive title reinsurance arrangements.The agreements, which contain no admission of wrongdoing, included a $650,000 settlement with CitiMortgage and its captive title reinsurance company, Chesapeake Reinsurance; a $675,000 settlement with M.D.C. Holdings Inc., certain homebuilding subsidiaries, and AHT Reinsurance; and a $305,000 settlement with WL Homes, a California and Colorado builder doing business as John Laing Homes. "HUD will continue to work with the states to investigate captive arrangements to make certain that they aren't created for the purpose of obscuring referral fees," said Brian Montgomery, HUD's assistant secretary for housing. (Captive reinsurance is a practice whereby a title insurance company transfers a portion of the risk and title premium to a company owned by the builder, lender, or real estate broker referring the title business.) CitiMortgage said it exited the title reinsurance business last year. "We strongly believe we were totally compliant with RESPA and HUD guidelines when we were engaged in that business, but we have agreed to a settlement in order to avoid the time and expense of protracted litigation," a CitiMortgage spokesman said. The homebuilders could not be reached for comment by MortgageWire's deadline.
