Lender, Homebuilders Accused of Using Captives to Funnel Illegal Payments for Referrals Settle with HUD
July 20, 2006
In a strong signal to users of captive title reinsurance, the Department of Housing and Urban Development has cracked down on questionable captive reinsurance arrangements, resulting in historic first settlements with a mortgage lender and its captive title subsidiary, and two major homebuilders. The settlements involve CitiMortgage, Inc. and its captive title reinsurance company Chesapeake Reinsurance; M.D.C. Holdings and several of its Richmond American Homes builder subsidiaries and AHT Reinsurance; and WL Homes, doing…
The regulator said in an amicus brief Wednesday that home equity investments can be considered credit and subject to Truth in Lending Act requirements.
“We’re still not at the level of profitability where we should be in home lending, just given as we continue to wind down that servicing book,” said Charlie Scharf, CEO of Wells.
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