Posted by Kari on August 6, 2012 17:12
The federal regulator tasked with protecting consumers in the mortgage industry, among other sectors, announced it is widening a probe to determine if mortgage insurers violated real estate law during recent years.
The Consumer Financial Protection Bureau, established under the Dodd-Frank Wall Street Reform and Consumer Protection Act, was previously in the process of a much narrower investigation, but is now examining past activity at mortgage insurers such as AIG, Genworth and MGIC Investment Corp, the Wall Street Journal reports.
The probe comes after certain state officials made allegations that these companies, as well as others, paid banks to win their mortgage business, according to the newspaper. Should this activity be proven, it would be in clear violation of lending regulation established under the Real Estate Settlement Procedures Act, which prohibits such transactions.
This investigation has been ongoing for several years, but was originally carried by the Department of Housing and Urban Development and state officials. Although the CFPB has assumed command of the probe, it has yet to make any formal comments on the matter, the news source reports.
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