US consumer bureau takes action against PHH Corp over kickbacks
WASHINGTON Jan 29 (Reuters) - The U.S. Consumer Financial Protection Bureau said on Wednesday it was taking action against mortgage lender PHH Corp over allegations of steering borrowers to mortgage insurers from which it took kickbacks.
The CFPB said it is seeking fines and repayment to customers from New Jersey-based PHH and several of its mortgage-related subsidiaries. The bureau filed the case in an administrative forum at the agency, and it will be tried by an administrative law judge.
Lenders sometimes require mortgage insurance for large loans to protect themselves if the borrower defaults, and the lender generally chooses the insurer, the CFPB said.
The bureau said when PHH made loans, it referred borrowers to certain insurers who would then purchase secondary insurance from PHH's subsidiaries, a form of illegal "kickback" to the company. The CFPB said that meant consumers paid more for mortgage insurance.
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