January 29, 2014

CFPB takes action against mortgage company

Jan. 30, 2014 – The CFPB announced Wednesday it has initiated an administrative proceeding against PHH Corporation and its affiliates, alleging they harmed consumers through a mortgage insurance kickback scheme in violation of the Real Estate Settlements Procedures Act.

CFPB said it is seeking a civil fine, a permanent injunction to prevent future violations and restitution for victims.

The bureau believes the scheme started as early as 1995. When PHH originated mortgages, it would refer consumers to its partner mortgage insurers. The CFPB press release said that "in exchange for this referral, these insurers purchased "reinsurance" from PHH's subsidiaries." According to Wednesday's Notice of Charges, PHH took the reinsurance fees as kickbacks – a violation of RESPA and caused inflated mortgage insurance costs for consumers.

CFPB notes that this administrative proceeding follows its settlements in 2013 when five other mortgage insurers participated in similar schemes.