Industry News

HUD settles captive title reinsurance allegations for $1.95M

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Three home builders -- Shea Homes Inc., William Lyon Homes and Fulton Homes -- have agreed to pay the Department of Housing and Urban Development $1.95 million to settle allegations they engaged in captive reinsurance. The agreements include a $950,000 settlement with Shea Homes and its captive title reinsurance company Shea Financial Services Inc.; an $850,000 settlement with William Lyon Homes and its captive title reinsurance company Duxford Title Reinsurance Inc.; and a $150,000 settlement with Fulton Homes, an Arizona builder. HUD said the home builders violated the Real Estate Settlement Procedures Act by using companies they owned or were affiliated with to "reinsure" title insurance policy. HUD officials say such arrangements are designed to generate referral fees and that reinsurance companies pay few or no claims. "In HUD's view, any captive title reinsurance arrangements in which payments are not bona fide and exceed the value of the reinsurance are a violation of RESPA,"...