Mortgage loan insurer Genworth Financial has received requests for information from the New York Insurance Department regarding any payments the insurer made to mortgage lenders, according to a regulatory filing made on Friday.

In its quarterly report with the Securities and Exchange Commission filed July 29, Genworth Financial said it received the information requests in May 2005. The requests were directed to each of the company’s U.S. mortgage subsidiaries, according to the SEC filing.

The New York Insurance Department was asking about captive reinsurance transactions “with lender-affiliated reinsurers and other types of arrangements in which lending institutions receive from our subsidiary any form of payment, compensation or other consideration in connection with issuance of a policy covering a mortgagor of the lending institution,” the filing said.

“We are also cooperating with respect to these industrywide regulatory inquiries,” Genworth said in the SEC filing.

The New York Insurance Department has broadly requested information from insurers that sell title insurance in the state, a spokesman for the New York Insurance Department told Reuters Friday.

At issue are allegations that banks are receiving illegal payments for steering business to particular title insurers.

Alleged kickbacks in the real estate title insurance arena have taken center stage this year, sparked by a Colorado inquiry into title insurance practices.

John Garamendi, California’s insurance regulator, announced in July that three major title insurers had agreed to pay more than $37 million in refunds and penalties to settle charges they had paid kickbacks to lenders, builders and Realtors.

The companies were accused of paying $25.4 million in illegal kickbacks to various lenders, builders and Realtors in exchange for the referral of title insurance business. The title insurers settled without admitting wrongdoing.

Garamendi, who is also co-chair of the Title Insurance Working Group within the National Association of Insurance Commissioners, has worked with Colorado and Washington state insurance regulators to probe a series of alleged phony reinsurance contracts between title companies and subsidiaries of real estate agents, developers and lenders.

The department in late July said it found that these “captive” firms were essentially shell corporations that had no offices, no employees, and no purpose other than to funnel the illegal rebates to their parent companies.

To accomplish this scheme, the title insurers would allegedly cede premiums from title policies to these captive reinsurance firms, which were controlled by builders, lenders and developers, according to the department.

The companies attempted to disguise these kickbacks as “reinsurance premiums,” according to California’s insurance department. Losses from insurance claims in the title industry are extremely low – well under 10 percent of premium – and reinsurance is unheard-of for this kind of title insurance, according to the department.

Calls to Genworth regarding the New York Department of Insurance information requests were not returned by press time.

Genworth Financial is a U.S. insurance company that was spun off by General Electric Co. in May 2004.

Genworth provides life and lifestyle protection, retirement income, investment and mortgage insurance to more than 15 million customers. The company’s three operating divisions include protection, retirement income and investments and mortgage insurance.

***

Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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