Industry News

HUD settles captive reinsurance claims for $1.4 million

Six home builders deny wrongdoing

Without admitting wrongdoing, six major home builders have agreed to pay nearly $1.4 million to settle charges that subsidiary companies they created to "reinsure" home buyers' title insurance policies violated the Real Estate Settlement Procedures Act (RESPA). The settlements, announced today by the U.S. Department of Housing and Urban Development, follow two earlier rounds of settlements. In those settlements, five major home builders and one lender agreed to pay $3.55 million to settle charges that payments they received under captive reinsurance schemes violated RESPA. The home builders involved in the settlements announced today are Pulte Homes Inc., KB Home, Beazer Homes USA Inc., The Ryland Group Inc., Technical Olympic USA Inc., and Meritage Homes Corp., and related companies. HUD maintains that captive reinsurance policies are often designed to generate referral fees for builders, with reinsurance companies receiving payment from title insurers despite paying few...

Comments