Industry News

Minnesota and HUD to crack down on affiliated title insurers

Mortgage lender agrees to pay $19,812 in restitution and fees

Minnesota and federal housing officials have launched a crackdown on affiliated business arrangements in which real estate brokerages, lenders or builders own a share of companies that provide title insurance. Affiliated business arrangements, or ABAs, are legal in many states unless they are determined to be sham businesses created to generate illegal payments and kickbacks in exchange for referrals. That's how the Minnesota Commissioner of Commerce and the U.S. Department of Housing and Urban Development have characterized Five Star Title, a partnership between a mortgage lender and title company. In a consent order, St. Paul-based lender Five Star Mortgage agreed to pay $9,812 in restitution and a civil penalty of $10,000 to settle charges that the company "accepted kickbacks or other things of value" for referring more than 750 loan customers to Five Star Title, "a sham affiliated business arrangement." The settlement with Five Star Mortgage is part of an ongoing investigation in...

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