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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Radian Group Inc | NYSE:RDN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.19 | -0.61% | 31.09 | 31.42 | 31.07 | 31.19 | 495,155 | 01:00:00 |
By Alan Zibel
WASHINGTON--A U.S. regulator on Thursday fined the main companies in the U.S. mortgage insurance business a combined $15.4 million in penalties, accusing them of paying illegal kickbacks to curry favor with lenders.
The companies agreed to end a practice of paying banks fees to win business, which the regulator said was in violation of federal law that prohibits steering in real estate transactions. Two of the companies said they had ended such practices several years ago.
The Consumer Financial Protection Bureau's acted against Genworth Financial Inc. (GNW), American International Group Inc.'s (AIG) United Guaranty unit, Radian Group (RDN) and MGIC Investment Corp. (MTG). These companies sell mortgage insurance, which is often required when consumers buy houses with down payments smaller than 20%. The insurance protects the lender if the borrower defaults.
Starting in the 1990s many mortgage lenders set up their own "reinsurance" units that took on a portion of the lending risk in exchange for a portion of the insurance premiums. CFPB officials said those arrangements amounted to illegal kickbacks.
"We believe these mortgage insurance companies funneled millions of dollars to mortgage lenders for well over a decade," CFPB Director Richard Cordray said in a statement. "The orders announced today put an end to these types of arrangements."
The companies, in reaching consent orders with the CFPB, did not admit or deny the regulator's allegations.
"We are pleased to put this behind us," Teresa Bryce Bazemore, president of Radian Guaranty, said in a statement. While the relationships complied with federal law "and caused no harm to consumers, this settlement was an opportunity to eliminate distractions at an acceptable cost," Ms. Bazemore said.
In a statement, a spokesman for AIG said "Along with most other major mortgage insurers, United Guaranty has agreed to resolve a potential challenge by the Consumer Financial Protection Bureau (CFPB) to industry-wide practices involving captive reinsurance which were largely discontinued in 2008-2009. United Guaranty believes these practices complied with the law and were fair to consumers, but settled the matter to avoid the distraction and expense of protracted litigation."
Genworth Financial and MGIC Investment Corp. couldn't immediately be reached for comment.
-Andrew R. Johnson contributed to this article.
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